Redefining Parametric Insurance through Cutting-Edge Technology
Descartes Underwriting is a Managing General Agency that works on behalf of a selected number of first-tier insurers, reinsurers, and insurance-linked securities funds. Founded in 2018 by seasoned insurers and entrepreneurs, Descartes Underwriting provides best-in-class risk modelling, bespoke design, and innovative insurance covers. Drawing its name from René Descartes, one of the greatest European scientific philosophers of the 17th Century, the company draws its advantage by applying new data sources and challenging the approach adopted by traditional insurers, all well growing exponentially.
Parametric Insurance – Resilience to Insurance Sector
Tanguy Touffut, CEO & Co-founder of Descartes Underwriting shared that the company was founded with the belief that greater use of parametric insurance will make businesses more resilient in the face of climate change and that innovation will come from start-ups rather than large groups. “Since our start in 2018, we have designed a new generation of insurance products, based on cutting-edge technologies, satellite imagery, IoT and data analysis. In comparison with traditional insurance, Descartes’ parametric insurance products have a more friction-free compensation mechanism,” he noted.
Parametric insurance pays out when a pre-defined event occurs, as measured by a specified figure or index, by leveraging new sources of data such as satellite imagery, IoT, image recognition, and data analysis algorithms. With parametric insurance, losses are detected in near-real-time, and payments can be made in just a few days versus the 12 months or more of traditional insurance. “This is truly disrupting the insurance industry, with products that are affordable, fully transparent and provide swift claim payment,” he added.
Further observing that Corporate Insurance is a conservative world in which the competitive landscape mainly consists of large established brands, Tanguy added that start-ups like Descartes Underwriting can help reshape the sector in a way that better meets the needs of corporate clients. He cited, “Our products that are transparent, simple, and custom-made; they are straight-forward and easy to understand, and are designed to rebuild the trust of consumers.” He added that start-ups are well-positioned to offer quick product design iteration and models that address climate change and emerging risks. “Through our technology and expertise, Descartes’ team is ready and fully committed to addressing the issues of climate change that the world is witnessing today,” reassured Tanguy.
Noting that corporate insurance is going through an existential crisis, Tanguy added that the current pandemic only emphasizes the shortfalls plaguing the sector. Issues like slow claim payments, affordability, and lack of transparency are especially biting for corporates trying to stay afloat or get back on their feet. The hardening market has also highlighted how complex and hard it can be to access corporate policies, he said. “Through technology, parametric insurance can offer better value for money, and an improved, friction-free customer experience, as payments are triggered in real time following the remote detection of a natural disaster, enabling insurers to keep the premium low. Policies are simple and stream-lined, easily understandable and with no exclusions”, added Tanguy.
Technology to the Rescue
Tanguy felt that the boom in available data is playing a pivotal role in allowing new entrants in the insurance market. “Thanks to new data sources, satellite imagery, and the Internet of things, you are no longer required to have historical data to be able to assess natural risks. At Descartes, we are convinced that AI and advanced analytics will enable insurers to pass on more benefits to clients. As risk assessment becomes more accurate, insurers will be able to offer more competitive rates and to cover risks that were previously considered uninsurable.”
Reiterating that insurance alone cannot stop climate change, Tanguy added that corporates need to work hard to support companies and governments in mitigating the risks and planning for the future. “Internalizing this belief has developed a strong fighting spirit within the Descartes Underwriting team and forces us to look towards the future with optimism”.
A Final Piece of Advice
“Today’s businesses and projects cannot be just about finding a market and selling products. Our society and planet call for greater causes – serving a purpose is paramount to driving momentum and talent,” signed off Tanguy.