In April 2023, Weather Risk Management Services (WRMS), the agriculture and climate risk management firm, launched SecuRisk, a digital-first global parametric insurance marketplace, that aims to address the gaps and challenges in emerging economies regarding insurance coverage.
During a recent interview with Reinsurance News, Anuj Kumbhat, Co-Founder & CEO of the firm, explained how the platform works, and what loopholes it addresses throughout the industry.
“SecuRisk serves as a marketplace connecting risk carriers and customers while also equipping both sides with essential tools. It also enables risk carriers to create and issue policies and empowers brokers to distribute and onboard customers easily,” he said.
“The platform supports secure and rapid underwriting and claims management and has simple product education and capacity-building tools that keep the needs of low-income communities in mind.
“SecuRisk is a very simple, transparent & easy-to-navigate solution to serve emerging economies & low-literacy communities. The platform has an interface for insurers and reinsurers to evaluate and underwrite parametric policies. It also allows them to manage their portfolio risk and claims through the system. The customer-facing front-end also has a mobile application that enables end-to-end parametric insurance policy lifecycle management for customers through a simplified interface,” continued Kumbhat.
The loopholes that SecuRisk addresses include limited access to expertise, resources, and data, which is faced by risk carriers and the market in emerging nations.
Kumbhat highlighted that despite parametric insurance gaining acceptance across Europe and North America, it has struggled to gain the same traction in emerging economies due to a variety of factors, such as long product rollout times and costs, low-quality accurate data, and a lack of product awareness.
As a result, these obstacles have prevented rising economies from gaining considerable and long-term benefits from parametric insurance options.
“SecuRisk’s proprietary global data stack plays a crucial role in overcoming these challenges. It leverages surface weather, gridded climate data, agricultural yields, and remote sensing data, which are stored and processed in the cloud. This data stack provides a foundation for the platform, offering valuable insights and information to facilitate the creation and implementation of parametric insurance products. With millions of data points uploaded daily, SecuRisk ensures the availability of up-to-date and reliable data for risk assessment and pricing,” he added.
Since the unveiling of the platform, WRMS has launched a number of parametric initiatives in many countries.
Kumbhat highlights some of the success stories that WRMS has found with SecuRisk so far.
“WRMS, in collaboration with UNCDF, has launched a parametric initiative in Fiji to provide social protection in cyclone and rainfall-prone areas. When forecasts indicate the likelihood of cyclones or heavy rainfall events, people are paid a certain percentage of the cyclone protection fund to help them prepare for these disasters. This initiative aims to reduce the vulnerability of communities to climate-related risks.
“WRMS has introduced a parametric insurance program in Vanuatu and Tonga. This program offers cyclone protection coverage to prevent crop loss and protect the livelihoods of farmers. In the event of a cyclone, insured farmers receive payouts that can help them recover from crop damages and maintain their livelihoods.”
As well as this, WRMS has also been able to provide parametric insurance coverage across Vietnam, Honduras, Philippines, and Haiti.
Staying on the topic of parametric insurance, Kumbhat names some emerging technologies/trends that could further enhance the effectiveness of parametric insurance for businesses within WRMS’ sector.
“The integration of Internet of Things (IoT) devices has the potential to revolutionize parametric insurance. IoT sensors can provide real-time data on various parameters relevant to insurance coverage, such as weather conditions, equipment performance, or even employee health and safety. This continuous flow of data enables insurers to establish more accurate parametric triggers and enhances the overall precision of risk modeling,” said Kumbhat.
He also mentioned blockchain technology, describing it as being another “game-changer for parametric insurance.”
“By leveraging the decentralized and transparent nature of blockchain, insurers can create smart contracts that automatically execute when predefined triggers are met. This not only reduces administrative overhead but also ensures quicker claims settlement, enhancing the overall efficiency and trustworthiness of parametric insurance arrangements.”
Adding: “Machine learning and artificial intelligence (AI) are crucial components in refining parametric insurance. These technologies can analyze vast datasets to identify correlations, assess risk factors, and continuously improve risk models. As AI algorithms become more sophisticated, they can adapt to changing business environments, helping insurers to refine and customize parametric policies dynamically.”
