The Future of Insurance The Future of Insurance – Jean-Christophe Garaix of Liberty Mutual Re & Andy Thompson of Safehub
Jean-Christophe Garaix, Head of Agriculture & Parametric Insurance for Liberty Mutual Reinsurance, and Andy Thompson, Co-Founder & CEO of Safehub, join the show to discuss their collaboration on addressing earthquake exposure.
Using Safehub's IoT sensors, they've been able to design a parametric insurance product that's live in Mexico City – one of the most quake-prone areas in the world – that brings building-specific shake accuracy to the adjusting of claims. This allows for an affordable coverage that can be provided quickly while solving for the basis risk inherent in previous earthquake data like shake maps.
Together, they're working to create great resiliency through the network effect of improved and more point-specific data coming together to paint accurate pictures of risk and how it plays out.
Highlights from the Show
- Jean-Christophe (JC) Garaix oversees the parametric business for Liberty Mutual Reinsurance, looking for external / third party index for the basis to adjust a risk
- Andy Thompson, co-founder of Safehub, is a structural earthquake engineer by background who became acutely aware of the lack of individual-building performance during earthquakes and other shaking events, and sought to create a sensor-based solution that's easy to deploy to solve this
- Existing tools are about regional effects, which are helpful for municipalities or disaster response efforts, but not useful for a specific building, where the impact of one building could be completely different to that of a neighboring building
- Safehub has been working with many building owners for years to help with business continuity, maintenance and general management of their properties, but thought this could increase resilience by solving the basis risk issue JC talked about by partnering with an insurer
- The size, simplicity and stand-alone nature of Safehub's solution allowed Liberty Mutual to extend a coverage like this to smaller insureds in addition to their large property clients
- For parametric coverage to succeed, JC jokes that you need education, education and education
- Liberty is looking at similar solutions for other types of events, like cyclones where there is broad-brush data, but they need to measure the wind speed at a specific location to offer coverage for an individual property
- Today, the issue is less about data availability (which was the issue a decade ago), and more one of product design
- A barrier to adoption of the kinds of sensors that allow for solutions like this has been the complexity of installation, making the commercial market more attractive for such products
- Bringing asset-specific data in a bigger network allows for more resiliency and protection by enabling parametric and other innovative products that can close protection gaps, offer cover options
This episode is brought to you by The Future of Insurance book series (future-of-insurance.com) from Bryan Falchuk.
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