Yokahu has launched cat-risk.com, an independent parametric insurance exchange for the London re/insurance market.
The platform is designed to connect brokers, carriers, and data providers to facilitate parametric insurance transactions and expedite claims processing.
The exchange aims to integrate with the existing London market framework rather than disrupt it, reducing the time required for quoting and binding policies from days to minutes. It utilizes real-time risk assessment, pricing, and capacity allocation, to expand parametric re/insurance access.
The platform also allows multiple carriers to co-insure risks based on their individual risk appetites. Yokahu, as a coverholder, administers each carrier’s portfolio separately before allocating capacity to presented deals. This process follows BiPar principles and aligns with Lloyd’s trading traditions in a digital environment.
This structure enables more risk carriers to participate in the parametric climate resilience market with smaller initial lines and lower portfolio volatility.
In addition to facilitating transactions, cat-risk.com automates policy triggering, monitors real-time weather conditions, and presents claims for carrier approval, reducing claim payment times to as little as 48 hours.
At launch, the platform is integrated with data providers such as ReAsk and has secured support from multiple major capacity providers and brokers. It currently offers coverage for extreme weather risks, including hurricanes, typhoons, and storms, with policy limits of up to US$5 million per transaction.
Future expansions will include earthquake coverage, higher limits, and additional risk insights.
The launch of cat-risk.com is aimed at fixing major issues in the segment. Yokahu founder and CEO Tim McCosh said parametric insurance has faced placement inefficiencies that have slowed adoption.
According to PwC, parametric solutions often face what’s called a basis risk, which occurs when there's a discrepancy between the parametric trigger and the actual loss experienced.
For instance, a policy might not pay out if a hurricane's wind speed doesn't meet the predefined threshold, even if significant damage occurs. Conversely, a payout might be triggered without substantial loss. Mitigating basis risk requires careful design of triggers and continuous monitoring.
Accurate, high-quality data is essential for defining triggers and ensuring fair payouts. Inaccurate or unreliable data can lead to disputes and undermine trust in parametric products. Ensuring data integrity and transparency is vital for the credibility of these insurance solutions.
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