OTT Risk enters the Lloyd’s Lab as part of Cohort 9
We are delighted to announce that we will be joining the Lloyd’s Lab’s Cohort 9 to support the insurance market in responding to a host of under-covered perils using parametric insurance.
Today, business interruption risks are critically under-insured: studies estimate global interruption losses to be ~$5Tn in 2020 due to COVID-19, of which <1% were insured; the costs of systemic cyber-attacks could be up to $22Tn; and NatCat events have incurred $210Bn and $280Bn of economic losses in 2020 and 2021 but only ~40% were covered by insurance. Experts have extrapolated from COVID-19 that the coverage gap for business interruption could be annualised to $9Tn — the aggregate figure including other under-covered risks is unknown but potentially an order of magnitude higher. There is a need for a scalable insurance solution to transfer some of those risks to insurance, reinsurance, and financial markets.
Over the past year, we have developed several policy prototypes to address risks ranging from epi-pandemics (including any resurgences from COVID-19), to terrorist attacks, to social unrest, to cyber catastrophes; and their business interruption impact on industries such as retail, hospitality (hotels, restaurants), leisure, tourism, and aviation. As Europe enters a difficult winter 2022, the prospect of energy rationing, business closures, and even social unrest further highlight the need for such coverage.
Leveraging key business data (card transactions, passenger traffic, occupancy rates and many more), we are able to design insurance that matters most to buyers: that is, a policy that pays fast and precisely when disaster strikes, regardless of causation. We recognise that the business and economic outcome is what matters most for an insured.
As we move forward, we will work closely with Lloyd’s to design broader business interruption coverage that can be endorsed by leading insurance markets, with the aim to increase the scale of comprehensive, business-interruption solutions and reduce the coverage gap for insureds.
We are excited to be on this journey and thankful to have the opportunity to build new innovative insurance policies alongside thought leaders and other innovative companies, and we very much look forward to delivering on our ambitions.
To read more about Lloyd’s Lab’s Cohort 9, click here.