View this article online: https://www.insurancejournal.com/news/international/2021/03/24/606644.htm
Lloyd’s has launched a parametric earthquake insurance policy in New Zealand, in partnership with start-up Bounce Insurance, which uses cutting-edge technology and real-time data to automatically pay customers within five days of a strong earthquake.
The new product, also called Bounce, is designed to provide New Zealanders with affordable earthquake insurance and fast claims payments, to support customers’ needs following an earthquake and quickly cover immediate expenses incurred. It does this by tracking Peak Ground Velocity (PGV), which triggers payment at levels of 20 centimeters per second and above.
Bounce has been developed by the company’s founder, Paul Barton, in partnership with Lloyd’s, Guy Carpenter, Marsh and Jumpstart Insurance, an Oakland, Calif.-based surplus lines insurance broker.
The development of this parametric insurance product follows Lloyd’s commitment to remove complexity and provide enhanced coverage and clarity for their customers through simpler products.
Bounce does not replace conventional earthquake insurance that covers significant losses. It works alongside conventional products to offer accessible earthquake insurance, with low monthly premiums, providing customers and their communities with financial resilience in the immediate aftermath of an earthquake. Bounce provides immediate cash flow to cover a wide range of miscellaneous expenses to kickstart financial recovery.
The product uses data from GeoNet / GNS Science, the New Zealand government agency responsible for measuring earthquakes, to objectively identify areas where customers have experienced a strong earthquake. Lloyd’s said this removes any potential conflicts of interest and provides transparency to customers on the data used and reliability of the product.
Payment eligibility is based on shaking intensity (the parametric trigger). If the customers’ location is subject to shaking with a PGV of at least 20 centimeters per second, they would qualify as being eligible to receive payment within five days.
Claim payments are based on the strength of any earthquake, with payments based on “steps,” which means that the stronger the earthquake the more of the cover is paid out.
“We’re thrilled to be able to step up and provide a technologically sophisticated and innovative earthquake insurance product, Bounce, which will provide customers with much needed support and financial resilience in the immediate aftermath of an earthquake,” commented Lloyd’s CEO John Neal, in a statement.
“The launch of Bounce is a hugely significant development for the New Zealand insurance market. This pioneering coverage has the potential to generate considerable societal benefit through providing individuals and communities with the financial resilience to address future earthquake events,” said Victoria Carter, chairman, Global Capital Solutions, International, at Guy Carpenter.
“Bounce can give households and businesses confidence they will receive financial support quickly after a major quake,” according to Paul Barton, founder and CEO, Bounce, which is a Lloyd’s coverholder. “A wider benefit of our mission, to help Kiwis bounce back quickly, is that more money flows into our communities when they need it most. We have partnered with world leaders in insurance, but we are still very much a Kiwi company focused on Kiwi solutions.”
Source: Lloyd’s