The Demex Group, a technology-enabled managing general agent (MGA), has raised $5 million from a syndicate of existing and new investors led by Blue Bear Capital, to bring its breakthrough Retained Climate Risk Reinsurance (RCR Re) solution to the market.
Blue Bear Capital is a venture and growth equity firm that is heavily focused the world’s climate challenges. The company has been a major partner for Demex since 2021.
“This additional investment empowers us to deliver new weather risk transfer capabilities to insurance companies that are facing escalating losses due to the increased frequency of non-catastrophic weather events,” commented Bill Clark, Demex CEO.
“Severe convective storms (SCS) cause accumulated losses in midwestern states that exceed hurricane losses in coastal states. SCS loss accumulation increasingly causes earnings unpredictability, credit rating downgrades, and even insolvency for insurance companies.
“Our reinsurance broker distribution partners and our risk capacity network are eager to address this risk and Demex RCR Re is the first purpose-built solution designed specifically for severe thunderstorms.”
At the same time, RCR Re is available now and is quickly becoming a key component of insurers’ reinsurance programs as they plan for 2024.
It is very clear that there is a well-documented protection gap for SCS and other ‘secondary’ weather perils that include winter storms, heat waves, cold snaps, droughts, and floods.
Secondary perils are playing a pivotal role in driving global insured losses that now accumulate to exceeded losses generated by ‘primary’ catastrophe perils such as hurricanes and earthquakes.
In addition, the increased frequency of secondary perils is impacting the balance sheets of insurance firms.
Secondary peril losses have accumulated to $1.1 trillion since 2000 and surpassed $880 billion of losses caused by primary perils during the same period.
Hank Hattemer, COO of Blue Bear Capital added: “Blue Bear is excited to lead this round for Demex given the unequivocal opportunity for Demex’s team and technology to provide a risk transfer solution that is calibrated to the weather-driven loss experience of insurers.
“Insured SCS losses are already near $40 Billion this year, underscoring insurers’ need for financial protection immediately. Demex RCR Reinsurance solution is the only mechanism in the market to reinsure SCS and other Secondary Peril losses.”
