Resolute Global Partners, an investment advisor specialising in re/insurance, has launched a brand new type of reinsurance contract created in collaboration with global reinsurance broker Gallagher Re and catastrophe modelling firm Karen Clark & Company (KCC).
This innovative reinsurance contract named Footprint focuses on natural catastrophe risk in the United States, from severe convective storms and wildfires to hurricanes and earthquakes.
It employs advanced risk modelling technology to deliver solutions for insurance companies and investors. It can solve a number of issues that have vexed the industry for years, including trapped capital, extended settlement times, economic inflation, social inflation, non-modeled risks, and pricing uncertainty, Resolute states.
The product’s benefits include rapid claim settlement (within 30 days of an event); automatic commutation (within 30 days of contract maturity); and fixed exposure risk.
Unlike other products, such as parametric triggers, industry loss warranties and catastrophe bonds, this approach provides a more accurate assessment of storm losses than what is currently available, Resolute states.
The first Footprint transaction has been completed with a focus on severe convective storms, which can include tornadoes, hail, and high winds. They are among the most common, most damaging natural catastrophes in the US, and have been one of the costliest perils for insurance companies.
KCC’s advanced catastrophe modelling technology is used to create the high-resolution catastrophe and severe weather event intensity footprints, which are then superimposed on a portfolio of properties to estimate the resulting losses to the portfolio of risk.
Tom Libassi, Co-Founder and Managing Partner of Resolute Global, said: “We’re proud to lead the market with another innovative insurance solution. Footprint gives investors the opportunity to capitalise on the current attractive rate environment – freed from the problems the industry has been grappling with over the past several years.
“Given the much-improved structure, terms, and pricing that Footprint provides to insurance companies and investors compared with other contracts, we believe this product has the potential to transform the reinsurance industry.”
Karen Clark, CEO of KCC, said: “Severe convective storm losses dominate weather-related property claims in the U.S., and KCC has invested substantial resources to develop the most advanced and accurate models. We’re thrilled to be working with Resolute Global to bring to the market this innovative transaction providing substantial cover for severe convective storm losses along with a transparent, timely, and highly efficient way for investors to access the market.”
“We are pleased to have advised Resolute Global on this innovative reinsurance contract. In this challenging marketplace, we believe this new product will help expand the sources of capacity for our clients,” added Doug May, President, Gallagher Re North America.
