Global Parametrics, the parametric and index-based risk transfer startup backed by the UK and German governments, has structured a solution to provide parametric protection for the world’s most remote habitable island.
The solution provides protection against extreme windstorms for the Tristan Lobster Processing Facility, the main business on Tristan da Cunha, a British Overseas Territory in the South Atlantic.
The solution has been structured as a derivative issued by GP’s Natural Disaster Fund (NDF) with Ovenstone Agencies (Pty) Ltd (the operator of the Tristan da Cunha Lobster concession) as counterparty.
The parametric coverage will ensure that the Lobster Processing Facility, which is the island’s main employer, can continue to operate and protect the livelihoods of the island’s inhabitants.
Due to the inaccessibility of the island, and the nearest weather station on Gough Island over 400km away, GP structured the solution using the ECMWF ERA5 weather dataset.
This pricing and settling off globally modeled weather data enables GP to structure parametric wind solutions anywhere in the world no matter how inaccessible the location or asset, or what ground information exists.
Toby Behrmann, Global Parametrics’ Innovation & Partnerships lead, commented: “When we were approached by the Administrator of Tristan da Cunha, we knew that this unusual situation would be a test of our ability to provide a risk transfer solution in the most remote of locations where other alternatives are unviable, and we have passed with flying colours.”
“This is a textbook case of Global Parametrics working together with Government and commercial partners to fulfil our mission of protecting fragile livelihoods in the face of extreme weather events,” Behrmann added.
CEO of Ovenstone Agencies (Pty) Ltd, Andrew James, also stated: “We are pleased to have worked with the Global Parametrics team to develop an innovative solution to provide cover for the Tristan Lobster Processing Facility, a key Tristan asset that protects jobs and income on the planet’s most remote inhabited island, at a time when it is challenging to obtain traditional insurance cover.”
Daniel Wilcox, Private Sector Development Advisor at the UK’s Department for International Development (DFID), added: “The UK Government’s Department for International Development, through the Natural Disaster Fund (NDF) was pleased to support this transaction.”
“As a collaborative effort with our partners at the Foreign and Commonwealth Office such an innovative transaction outlines the importance of building resilience to extreme weather which is key to the ongoing prosperity of Tristan Da Cunha and other British Overseas Territories,” Wilcox continued.
“I am delighted that Global Parametrics was able to structure a solution for Ovenstone Agencies (Pty) Ltd which will ensure the continued operation of the Island’s fishery.”