As capacity tightens across global markets, the protection gap for Earthquakes exposure is widening, forcing corporate clients to compromise their insurance limits or be left uncovered.
In the past decade, less than one-fifth of all Earthquake losses globally were covered by insurance. This protection gap is especially striking considering that year-after-year earthquakes cause severe material and financial impacts to civil structures & industrial assets, and bring major business expenses to maintain supply, production, and storage continuity.
Descartes’ parametric earthquake covers offer brokers, corporate, and public sector clients an alternative to maintain Earthquake insurance at an affordable rate, including in the most challenging regions of the world.
We cover clients’ earthquake exposure in all sectors, from public infrastructure, such as roads, bridges, or dams, to industry buildings and strategic supply chain assets, offering full flexibility and swift payouts.
Our parametric earthquake products leverage seismic activity data to evaluate client’s exposure and provide customized coverage that meets their budgets and needs.
Payout structures are built according to predefined magnitudes and distances to the epicenter or induced pga (peak-ground-acceleration) at the insured locations.
Utilizing near real-time monitoring from official statistics published by an agreed third-party (e.g. USGS), enables us to deploy our covers on selected spot locations as well as large multi-location international programs.
Client Need: A major international infrastructure operator needs to insure a highway in the Mediterranean, a peak earthquake zone and exposure for many business players. The client and their broker face challenges attaining full capacity on this linear asset.
Pain Point: Insuring the highway, including all tunnels, bridges, and toll stop infrastructure, to their full value is a requirement from the financial parties involved. However, traditional capacity falls short in meeting this need due to the difficulties in assessing the risks on these widely dispersed and differentiated structures
Our Solution: Descartes offered parametric earthquake cover for the entirety of the highway using our proprietary models. With an innovative structure, we could take into account the changing soil-nature and civil infrastructure along the route, adjusting payout for each earthquake severity accordingly.
The Result: The highway gets covered to the full required limit with bespoke terms that satisfied both risk management and financial parties. The simple, straightforward payout structure was much appreciated by the client, providing certainty of liquidity within days of a triggering event.