Aon Benfield, the global reinsurance intermediary and capital advisor of Aon plc, has launched its new weather reinsurance product that offers insurers protection against adverse weather losses in the UK.
The new coverage, named WExcess, provides index-based coverage. It was developed in partnership with Swiss Re and weather risk management expert CelsiusPro, and “is designed to help mitigate the financial losses incurred by insurers during severe weather events, such as the recent UK winters which have been among the coldest in recent history,” the bulletin noted.
WExcess “is based on official weather data and transparent, flexible triggers which can be tailored to each insurer’s individual risk profile and protection requirements.
“Buyers of the protection are required to demonstrate an insurable interest and provide information to enable estimation of likely losses by providing at least five years’ incurred loss history for weather perils,” the bulletin explained. The data also assist Aon Benfield to tailor the product to individual requirements.
Kurt Cripps, UK and Ireland Team product leader, at Aon Benfield commented: “This index-based product is seen as an alternative to aggregate catastrophe reinsurance cover and can offer lower retention levels than traditional reinsurance solutions.
“The loss which will be suffered by the insurer on the occurrence of the pre-arranged trigger, which can be customized to business requirements, is calculated and agreed at the commencement of the policy on the basis of the insurer’s loss history; no further proof of loss is required in the event of a claim. The trigger is highly transparent and is calculated by leading experts in the weather risk management environment.”
Stuart Brown, Head Origination Weather & Energy at Swiss Re added: “Severe weather seriously impacts business processes and causes losses for our insurance clients across almost all sectors of industry. In recent years, we have seen the insurance costs of unpredictable weather events skyrocket, especially when it comes to property and motor lines. This new weather product gives insurers more protection against the costs of severe weather and this means that they can continue to offer highly comprehensive cover to their clients.”
Source: Aon Benfield