Jumpstart, a California-based InsurTech start-up, has officially launched with a new type of natural disaster insurance product that provides parametric coverage and text message driven payments for earthquake risks.
The company uses technology to track real-time data and provide automatic payments initiated by text message following an earthquake of pre-specified intensity, eliminating the need for a complicated claims processes.
Insurance policies will initially be underwritten and administered by AmWINS Group Inc. and the insurer will be The Channel Syndicate 2015 at Lloyd’s, which is a non-U.S surplus lines insurer qualified to accept placements from California surplus lines brokers.
Jumpstart said its product is designed to be simple and affordable in order to build earthquake resilience in California, which has an unusually large protection gap given its high exposure to earthquake and other natural catastrophe risks.
A recent U.S Geological Survey reported that there was a 99% chance of a magnitude 6.7+ earthquake occurring somewhere in California within the next 30 years, and yet only about 11% of California households purchased earthquake insurance in 2016, which is not required by mortgage lenders.
Jumpstart also noted that 62% of Americans have less than $1,000 of savings, meaning they may lack the means to recover following a disruptive earthquake, and claimed that its coverage would cost approximately one-tenth of the price of conventional earthquake insurance.
“As a structural engineer, disaster resilience is my life’s work, but after Hurricane Katrina, I realized that resilience means more than safe buildings,” said Kate Stillwell, founder and Chief Executive Officer (CEO) of Jumpstart. “When a big quake strikes my hometown of Oakland, millions of families will be devastated financially – even more so than physically.
“Our immediate needs might be things we can’t anticipate – childcare expenses, or a place to stay for a month,” she added. “Surprise costs can throw a wrench in not only your daily routine, but also your long-term financial sustainability. Just-enough money, at just the right time, allows each of us to stay in our communities and be part of the solution.”
Will Thorne, Innovation Leader at the Channel Syndicate, also commented: “Jumpstart’s proposition offers something new to consumers who will likely need financial help after a potentially life-changing earthquake event. We are delighted to be working with Jumpstart and AmWINS to facilitate the delivery of Jumpstart’s innovative product in California.”
Trevor Maynard, Head of Innovation at Lloyd’s, further stated: “The current protection gap – the amount of economic loss that isn’t insured – impacts the entire market and plagues the global economy. Jumpstart’s parametric model could play a significant role to help close this gap and build resilience of local communities.”
Although Jumpstart’s first offering will be for earthquakes in California, it has plans to roll out the product in other states and to expand to other types of natural disasters.