Parametric tornado insurance launched by Beazley, Sola & Spinnaker

Specialty London headquartered insurance and reinsurance company Beazley has launched a parametric tornado insurance product, which it claims is the first such admitted product in the US.

Beazley has partnered with Sola Technologies and Spinnaker Insurance Company to deliver what it terms a parametric tornado disaster benefit insurance product, named Tornado Crisis Insurance.

The parametric insurance product utilises National Weather Service (NWS) data so that a fast and straightforward claims process can be initiated automatically on occurrence of qualifying tornado events.

Beazley said that, “The NWS will confirm the path and severity along the path, based on the EF (Enhanced Fujita) scale of a tornado, which then acts as a trigger for payments to be generated. Sola aims to pay the disaster benefit shortly after the event, compared to the extended time it often takes for traditional policies to pay out.”

Policy limits of up to US $15,000 can be secured, with the amount intended to cover the property insurance deductible and immediate expenses for homeowners.

The coverage can be used as a supplement to a comprehensive homeowners or renters policy and it has been made available to homeowners in 15 US states in the Midwest and Southeast, with more locations expected to come online soon.

We make the assumption here that Spinnaker is fronting the product for Sola, while Beazley is providing reinsurance capacity to back the parametric tornado insurance coverage, as details of each parties role were not clear.

Neil Kempston, Head of Incubation Underwriting at Beazley, said, “Beazley is well known for its focus on ensuring clients have a seamless and stress free claims process. By applying data and technology, we believe the new Tornado Crisis Insurance product will further improve the situation for policyholders who need a fast claims payment in the aftermath of a tornado. We are pleased to be supporting this innovative new solution which can help policyholders with the immediate challenges following a tornado.”

“We are excited to partner with Sola, providing capacity for their novel Tornado Crisis product, and expand our relationship with Beazley,” added, Torben Ostergaard, Spinnaker’s President and CEO. “Both companies share Spinnaker’s commitment to innovation and delivering positive client experience.”

Wesley Pergament, CEO of Sola, commented, “Our mission is to help people recover faster. We are building the first fully data-driven claims process to protect policyholders from the ever present risk of tornados. Sola is paving the way for a new era of insurance products that bridges the payment gaps and delays that sometimes happen with traditional insurance.”

Costero Brokers, a Lloyd’s broker, served as the sole placing broker and was responsible for securing fronting and reinsurance capacity.

James Forbes stated, “The Costero team is thrilled for Sola and excited to see how their vision for insurance products that result in rapid, data driven, claim payments changes how the market provides cover for weather and climate risks.”