Homeowners in 37 states now have access to a parametric-like multi-peril disaster insurance product designed to deliver quick cash in the wake of a natural disaster.
The product, Recoop Disaster Insurance, pays out a lump-sum cash benefit from $5,000 up to $25,000 after a declared disaster that causes at least $1,000 in damage.
To be eligible for a policy, customers must have an existing homeowners or renters insurance policy.
Unlike typical home and renters’ insurance policies, Recoop covers multiple natural disasters ranging from earthquakes, hurricanes (including storm surge but not freshwater flooding), tornadoes, and wildfires to gas explosions, dust storms, and winter storms.
Recoop promises policyholders they can receive their cash benefit within 24-48 hours of a disaster declaration in most cases. It says that compares to typical insurance that can take upwards of 30 days to process and pay policyholders. There are no restrictions on how policyholders spend their payout.
To be eligible for a payout, customers must be in a state or federally declared disaster area and have sustained damages of $1,000 or more. A disaster does not need to be declared after a gas explosion for you to submit a claim.
Winter storms and hazardous winter weather are covered when at least five inches or more of snow or sleet accumulate within a 12-hour period, or at least seven inches or more of snow or sleet accumulate in a 24-hour period.The product is being offered directly to consumers online at recoopinsurance.com, as well as through employers as a group benefit.
Des Moines, Iowa-based Recoop notes that the number of disasters per year has more than doubled from the 1990s to the 2010s and in 2020 alone there were 22 natural disasters with losses exceeding $1 billion each.
“While we can’t eliminate the risk of natural disasters or put a price on peace of mind, we can give security to millions of families coast to coast,” said Recoop Founder Darren Wood. “We like to say that Recoop picks up where insurance stops. We help pick up the tab, and the pieces, so consumers can bounce back faster after a disaster.”
How It Works
Policyholders upload photos of their home upon enrolling. After a disaster, customers start their claim by answering several questions and sending photos of their home for proof of loss. Sedgwick, which handles Recoop’s claims, compares the original photos with post-disaster photos to assess the damage and help process claims swiftly. If the damages surpass the $1,000 damage threshold, customers qualify to receive the full amount of their Recoop benefit, except in states with total incurred loss clauses.
Recoop Disaster Insurance is currently available in Alabama, Alaska, Arizona, Arkansas, Colorado, Delaware, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Carolina, Ohio, Oklahoma, Oregon, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington D.C., and Wisconsin.
The company said it is focused on online purchases and distribution through employee benefit brokers at this time but envisions adding agents and other distribution later. It says it plans to enter additional states and be in all 50 “in the near future.”
Recoop is underwritten by Professional Solutions Insurance Co. and backed by Swiss Re and Munich Re.
Recoop says its disaster insurance is the “first and only multi-peril” property/casualty insurance product designed to quickly pay claims following a natural disaster.
However, Recoop joins a small roster of parametric products that bypass a typical claims process and pay out based on a formula or event.
Jumpstart Insurance Solutions began offering earthquake insurance in California in 2019 in the form of a parametric product, with payments linked to a formula and based on U.S. Geological Survey earthquake measurements. The company provides a set payout amount based on the quake intensity, rather than the cost of damage. Earlier this month, digital flood insurance provider Neptune Flood acquired Jumpstart.
Irish insurtech Blink has launched a hurricane non-damage parametric insurance product called “Blink Interruption.” The product aims to cut average business interruption claims processing time by up to 95%. It uses automated financial validation and immediate pay-outs to allow businesses to get back on their feet just days after the event occurs. The product is now being offered in the U.S. and plans are afoot to roll it out globally.
Also, First Insurance Co. of Hawaii has a parametric product for Hawaii homeowners and renters. The company’s FirstTrack product provides coverage for expenses that fall below most hurricane policy deductibles, including hurricane preparation and immediate post-hurricane expenses. FirstTrack bases payments on two variables: storm wind speed (as determined by the National Hurricane Center) and the proximity of the storm to the insured home.
Swiss Re Corporate Solutions (SRCS) has a parametric offering called HAIL that is designed to protect companies in U.S. hail-prone states from the financial impact of a significant hail event, such as physical damage, lost revenue due to business interruption, or significant retentions in traditional property policies. HAIL combines the customer location data with a pay-out table that outlines policy amounts for reported hail size at location(s) during an event. When a customer has hail damage and the hail size calls for a pay-out under the policy. Instead of waiting for a loss evaluation, the payment is released soon thereafter. The customer can use the money for any financial loss associated with the event.
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