I love to read about emerging markets where wicked smart people see a need and create a product or service to fill it. One such up and coming market is the one that fills the protection gap by covering beach erosion, seawalls, docks, and landscaping, things that traditional insurance avoids covering.
Called parametric insurance, this coverage “triggers” (think: pays) based on the numeric parameters of an event, such as wind speed, storm surge height, distance to storm for hurricanes, or ground shake for earthquakes. So, for example, once winds reached 80 mph, a policy might pay, regardless of actual damages. In 2017 and 2018, there was a significant amount of loss with only about a third of it insured. Once significant loss occurs, most want solutions that can completely cover that economic loss and parametric coverage may be one answer.
Recently on one of my road trips (it was Mississippi and Louisiana and southwest Florida these last couple weeks) I met a young bicyclist at a coffee shop. As we talked, he discussed how he ships his $5,000 bike all over the world to competitive races and wanted to figure out a way to leave his bike at home and “share” a bike of another bike racing aficionado who might not be using the cycle on race day. Immediately I began thinking of the insurance requirements/needs to cover the concept.
I would love to hear from you as we continue our summer activities. What are you doing over this summer that would have an insurance need and could be an emerging market? What protection gap needs filling? We’re here to brainstorm with you, and as one CEO said when asked about his innovative insurance product and its effectiveness, “Our biggest rubber-meets-the-road moment is when there’s a catastrophe, and when the policies respond as they’re supposed to, and as the clients expect them to. There’s no better testimonial or advertising out there.”!!
LMA Newsletter of 6-17-19
