Less than a year since entering the New Zealand market, Wellington-based Lloyd’s coverholder Bounce Insurance Limited has now widened its reach, making earthquake parametric insurance available not just to households and renters but also to businesses that are looking for a simplified disaster risk finance solution.
“We launched the business around 10 months ago, and we focussed on the direct-to-consumer retail offer,” noted Bounce founder and chief executive Paul Barton (pictured), who recently sat down with Insurance Business to talk about the changes within the start-up.
“It was more around looking at the low end where we provide $10,000, $20,000, $50,000 worth of cover. And we supported that with digital marketing, but on the back end of engaging with the market was feedback that we should be looking at providing some larger commercial covers that brokers would be able to provide to their customers.”
It was feedback that didn’t fall on deaf ears, with Barton’s camp swinging into action to come up with a commercial counterpart of their product.
He said: “On the back end of that feedback, we went ahead and did that. So, we worked with the Munich Re innovation team and with the Lloyd’s team, and we pulled together and developed a commercial parametric earthquake policy with all the same characteristics and features of our retail policy but with much higher sum insured levels up to $2 million.
“We still got speed of payment as a key attribute, and it’s a very fast way of buying down your excess deductible on earthquake risk. That allows business owners to take a heap of risk off the table at a really reasonable price of earthquake risk that they might not have been comfortable with.”
“Secondly,” continued the CEO, “the breadth of coverage – we don’t have any sort of small print in relation to how you can use the funds. Customers have complete flexibility to use that money however which way they want to support their business continuity. And so it becomes quite an important business interruption tool in the face of disaster.”
To ensure holistic risk transfer and that product placement is supported by suitable advice, Bounce’s commercial policy will only be accessible through broker distribution channels.
“We developed a broker portal that allows completely open pricing and provides automated quoting, underwriting and binding, and administration of policies for brokers,” shared Barton, who is also set to roll out a revamped website soon.
“That will allow brokers to get access into our system and then provide, really efficiently, information and prices to their customers in supporting the overall proposition that they provide around the earthquake risk.”
The Bounce boss, meanwhile, stressed that the policy is a contingent product that complements insureds’ existing conventional property insurance.
Barton elaborated: “We’re offering simplified disaster risk finance solutions for commercial clients that look to rapidly support their balance sheet in times of a crisis when they are typically strapped for cash anyway. That’s the proposition – because our ambition is to pay claims really rapidly after the policy has been triggered by an earthquake.
“I position the product as a contingent product; it’s not a property product. And it’s contingent on an earthquake happening that activates a policy. And I also position the product as a complementary product to the traditional insurances. The distinction with our product is that it provides certainty of cash flow once a policy has been triggered.”
According to the former Medical Assurance Society chief risk officer, full claim payment is made when the policyholder’s nearest GeoNet strong motion sensor records a ground shake of 30cm per second; partial if above 20cm per second.
As highlighted, brokers will be playing a crucial role in offering the new commercial policy to customers.
“We’re continuing to provide policies direct to consumer – they can come to the website and purchase,” Barton told Insurance Business. “But on the commercial side, what I found is that customers want to have that trusted and valued conversation with an advisor about this type of product. And I think that’s really valuable, because it provides and raises awareness.
“Brokers can also think of this as another tool in their toolbox to transfer as much of the customer’s risk as possible in order to bring peace of mind and business continuity. Brokers are able to enhance any advice and conventional policies by filling coverage gaps with a parametric solution.”
