Willis, a WTW business, has launched a new sensor-based parametric insurance solution designed to protect UK racecourses against localised flooding.
The product was developed in collaboration with Previsico, Descartes Underwriting (MGA), and Generali, which will act as the insurer.
In the UK, flood risk is rising, with related costs projected to increase by up to 50% to reach £3.6 billion by 2050.
Often located on low-lying floodplains, racecourses are especially vulnerable to flood-related property damage, resulting in costly clean-up, repairs, and refurbishment, as well as financial losses from business interruption. As a result, insurers often exclude flood cover for certain locations or impose very large deductibles.
Royal Windsor Racecourse, one of 16 UK racecourses owned and operated by the policyholder Arena Racing Company (ARC), is the first of its locations to implement a sensor-based parametric flood policy. Like several other ARC racecourses, including Worcester and Southwell, Windsor Racecourse is highly exposed to flooding due to its location directly on the River Thames and has previously been considered uninsurable for flood risk.
Claire Wilkinson, Managing Director, Alternative Risk Transfer Solutions, Willis, said, “Traditional insurance often struggles to provide affordable flood cover in high-risk areas leading to high premiums, large excesses or complete exclusions for flood. In contrast, parametric solutions offer an alternative approach, tailored to the specific needs of the client. Claims are paid automatically and promptly when a measurable flood depth trigger is met, regardless of actual damage. These solutions respond quickly and objectively, offering complete flexibility in the use of the claim proceeds.
The parametric solution involves installing a flood sensor, provided by Previsico, at a location on the insured property selected by ARC to reflect its specific exposure and requirements.
The policy is designed so that when the sensor detects water levels reaching the selected trigger depth, ARC automatically receives a payout. The payout scales according to the maximum water depth, up to the agreed policy limit. This allows claims to be paid quickly with no protracted loss adjustment process.
An additional benefit of the sensor-based approach is the continuous monitoring of water levels. This provides early warning of potential flooding, enabling the client to implement flood risk management protocols, including moving sensitive equipment to higher ground.
The solution can also be replicated across other flood-exposed locations and tailored to the specific circumstances of each racecourse, providing ARC with coverage for a risk that is often considered uninsurable.
Kieran Gallagher, Group Operations Director at ARC, said, “We are grateful to the team at Willis for offering this new insurance solution, which will be of real benefit to Royal Windsor Racecourse. The business has previously not been able to insure against flooding, so this new approach, combined with the ongoing monitoring of river levels by Previsico, will be hugely important.”
Hamid Khandahari, Data Scientist and Parametric Underwriter at Descartes Underwriting, commented that by developing a deep understanding of the site-specific flood exposure, incorporating historical flood data, as well as the impact of river defences and relief channels, they were able to support a tailored parametric insurance solution where traditional coverage options were unavailable.
