Arbol’s Parametric Catastrophe Reinsurance Solution Delivers Payout for Hurricane Ian Damages

The $10M payout was executed on October 21, just three weeks after Hurricane Ian departed the U.S. in one of the first payouts for loss or damage attributed to Hurricane Ian.

(Image source: Arbol homepage.)

Arbol Inc. (New York), a global climate risk solutions platform, has announced that the parametric reinsurance solution it developed covering hurricane risks in the state of Florida delivered a $10 million payout to Centauri Insurance, a Sarasota, Fla.-based property/casualty insurer operating in nine U.S. states. The payout was executed on October 21, just three weeks after Hurricane Ian departed the U.S. in one of the first payouts for loss or damage attributed to Hurricane Ian.

Siddhartha Jha, founder and CEO, Arbol.

An Arbol statement says that insurance carriers exposed to named storms can obtain a fully collateralized reinsurance solution developed by Arbol that pays out based on predefined, objective parameters. The company developed a parametric reinsurance product covering hurricane risks in Florida and other U.S. states. The parametric loss is calculated at individual policy location level and the payout is based on a reinsurance layer protecting the entire portfolio.

“The parametric reinsurance product enables claims to be settled rapidly, months or sometimes even years faster than the rest of the industry,” comments Sid Jha, Arbol Founder and CEO. “Because these policies pay out on objective data triggers, we can bring much needed efficiency and transparency to the insurance and reinsurance sectors while providing essential financial relief in the wake of a climate disaster like Hurricane Ian. Parametric solutions allow for claims to be settled rapidly and transparently, which is ideal for helping businesses in states like Florida with outsized risk exposure to hurricanes and enables long-term financial resilience.”

The Arbol statement explains that location-level payouts are determined based on the distance of each location from a particular hurricane track and the maximum sustained wind speed captured along the hurricane track. The data and calculation mechanism is transparent as it is pre-agreed before the contract commences. The solution pays out using National Hurricane Center data provided by dClimate, Arbol’s exclusive data partner and a leading decentralized climate information ecosystem.

Ricardo Espino, CEO, Centauri Insurance.

“During recent years, back-to-back storm seasons have battle tested insurers in our region and changed the landscape of our insurance industry,” comments Ricardo Espino, CEO, Centauri Insurance. “As insurers, we have to start thinking outside the box and seek innovative solutions for mitigating risk. Partnering with a cutting-edge company like Arbol, has given Centauri the ability to process claims faster in the aftermath of Hurricane Ian by utilizing real climate data and state-of-the-art technology.”

Estimates from the weeks after the storm made landfall indicate insurers could be on the hook for as much as $57 billion in insured damages. However, processing claims and distributing payouts from homeowners, businesses, and other entities across the state could take anywhere from a few months to years, as was the case with claims associated with Hurricane Irma.

Arbol reports that it developed this parametric reinsurance solution for the state of Florida earlier this year. The Arbol platform transacted $100 million gross written premium (GWP) in the first half of this year, outpacing all GWP written in 2021, the company statement says. The majority of the platform’s growth has come from parametric programs in the agriculture and energy sectors, with ongoing expansion into the leisure/travel and climate risk sectors. Arbol recently announced a partnership with SingLife with Aviva to offer the first parametric rainfall cover for travelers.

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Anthony R. O’Donnell // Anthony O'Donnell is Executive Editor of Insurance Innovation Reporter. For nearly two decades, he has been an observer and commentator on the use of information technology in the insurance industry, following industry trends and writing about the use of IT across all sectors of the insurance industry. He can be reached at AnthODonnell@IIReporter.com or (503) 936-2803.

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