New Paradigm Group launched Industry Parametric Protection, a unique technology-based alternative to traditional insurance industry storm and hurricane loss data collection, with increased accuracy based on automated meteorological measurements, in Fort Lauderdale on Oct. 22.
Industry Parametric Protection, or IPP, uses predetermined wind speeds or storm surge heights to calculate loss, letting global insurers and reinsurers utilize the platform for their own risk transfer and capital management needs. New Paradigm was founded by South Florida insurance entrepreneur Evan Glassman and Chairman Bradley Meier.
New Paradigm Group President and CEO Glassman explained that IPP is tailored to regional differences to offer insurers more efficiency in allocating capital to weather-stricken regions by using data from WeatherFlow, an existing network of wind monitoring systems since 2007 with nearly 100 stations along key coastal areas ranging from Texas to the U.S. Northeast.
“Weatherflow has committed our substantial experience and technical expertise, along with a large financial investment, toward reliably and accurately measuring the force of hurricanes at landfall,” Weatherflow CEO Buck Lyons said. “We are incredibly pleased to now see our technical capabilities used in New Paradigm’s innovative effort to facilitate risk transfer and help the industry manage its exposures.”
During a named storm, New Paradigm’s network registers maximum sustained wind speed; the data is then collected and certified by Risk Management Solutions (RMS), a leader in catastrophe risk models.
“RMS is delighted to work with NPG on its new Parametric Protection product, making coverage easier and simpler for insurance buyers, and increasing the spectrum of risk transfer products and choices with which they can cover their risk,” Ben Brookes, RMS vice president of capital markets, said.
Meier applauded the initiative, having previously led an enterprise that dealt in wind catastrophe reinsurance.
“I always found the basis risk surrounding the accuracy and compilation of the industry loss data, along with the lengthy duration for the loss data to be reported -- to the extent that it could be -- to be a concern,” Meier said. “IPP was designed to address those concerns by being transparent and rapidly settling to allow for a bespoke structure tailored for each cedant.”
New Paradigm Parametric, a subsidiary of New Paradigm Group LLC, licenses data. New Paradigm Group utilizes proprietary parametric triggers to provide risk transfer solutions for both the insured and (re)insurance companies.