The FloodShield triggers are built with the help of Floodbase, KatRisk, and ICEYE, and could potentially utilise ILS market capacity in the future.
Parametric flood insurance is a growing segment, with an increasing number of products offered in recent years. Guy Carpenter’s product provides customised flood coverage based on hazard footprints in almost real-time. FloodShield ensures payouts within weeks, with the coverage designed to be transparent for both buyers and sellers.
The FloodShield offering is flexible, allowing recoveries to be applied to flood event economic losses, and its parametric trigger can be adapted to suit various use cases and protection buyers, offering a range of coverage solutions to fit different budgets. It is also designed for mass applicability and can be scaled to support large portfolio coverage, with expected users including insurers, reinsurers, corporations, and public entities.
Guillermo Franco, Managing Director & Global Head of Cat Risk Research at Guy Carpenter, commented: “We are rolling out GC FloodShieldSM, a new mechanism for parametric flood (re)insurance, geared towards the risk transfer of large portfolios distributed across vast regions. Thank you to our colleagues at Guy Carpenter and our collaborators at Floodbase, KatRisk, and ICEYE.”
The FloodShield product sheet details the trigger and parametric structure, designed around a high-resolution grid with the client’s exposure aggregated across it and limits applied to each cell. In the event of a damaging flood, Guy Carpenter will work with reporting agents to gain a flood footprint, monitor the potential for parametric triggers to be breached, and manage any payments.
Indicative limits available are up to $100 million via traditional insurance and reinsurance markets, with the possibility of higher limits through the use of insurance-linked securities (ILS). Consequently, the broker expects the markets backing the FloodShield product to include insurers, reinsurers, and ILS funds or capital markets investors.
Multiple insurtech companies, including Floodbase, ICEYE, and KatRisk, will act as flood footprint providers for FloodShield, offering a range of options for clients and risk transfer buyers.
