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A technology firm and a managing general agent are partnering to offer extreme temperature insurance to commercial properties across the United States.

According to Vave, an algorithmic underwriting MGA, and The Demex Group, a climate risk analytics and technology firm, the extreme temperature coverage is parametric, with claims directly linked to temperature. When the temperature passes a predefined threshold – for example, below 20°F in winter – a claim is immediately triggered.

The claim amount corresponds to the severity of the event. More extreme events drive larger losses and lead to higher claim payments.

With climate change driving increased extreme weather, including harsh winter cold snaps and summer heat waves, the firms say that small-to-medium business owners can lose revenue and face higher utility, operating, and supplier costs. In February 2021 alone, according to NOAA’s National Centers for Environmental Information, the U.S. extreme cold snap cost an estimated.

Vave’s extreme temperature insurance is designed to provide up to $1,000 of immediate cash during intense temperature events.

Vave’s Robert Porter said the addition of Demex parametric weather cover to Vave’s commercial property product will “give small businesses increased peace of mind that they can continue to operate following extreme weather.”

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The policies are calibrated, based on hyper-local weather trends, and the weather integrates property-level weather in nearly 42,000 zip codes with underwriting algorithms and estimates the climate risks at every Vave policy in the United States.

The Demex platform was developed for analyzing, pricing and transferring climate-linked risks at scale.

“At Demex, we believe insurers will lead the way helping people manage the effects of climate change. We’re excited to launch this product because we see it as one of the first major steps to create climate resilience for policy holders,” said Ed Byrns, Demex CEO and founder. Byrnes is a former chief technology and innovation officer of Munich Re Trading.

Demex has offices in Washington, D.C., Brooklyn, New York and the Research Triangle, North Carolina.

London-based Vave, developed by specialty insurer and reinsurer Canopius in 2019, was relaunched as an MGA in June 2021. The data-driven MGA also offers a flood-only and U.S. homeowners products. Its products are controlled by algorithm.

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• Climate Models May Have Underestimated Impact of Extreme Weather Events
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Topics USA