The Demex Group, a climate risk focused insurtech that aims to deliver climate-resilience through financial risk solutions on a global scale, has launched new parametric snow insurance covers that are financially supported through derivatives agreements with ILS fund manager Nephila Capital, as well as new reinsurance agreements.
Demex has previously cited Markel-owned Nephila Capital, one of the largest insurance-linked securities (ILS) and reinsurance fund managers, as a key provider of weather risk capacity to support its range of parametric climate risk transfer focused products.
Nephila Capital’s appetite to assume catastrophe, climate and weather exposed insurance risks for its investor-base and its ability to partner with startups and help them grow, through provision of risk capacity and sometimes investment capital, makes the ILS manager an ideal partner for Demex.
Demex has launched new snowfall products, noting that, “Revenue and operating costs in snow-sensitive businesses are experiencing unexpected volatility driven by the changing nature of winter storms.”
“Demex snow insurance delivers climate resilience by addressing volatility stabilizing operational budgets that are linked to snowfall,” the company explained.
“Unpredictable volatility creates significant challenges for commercial property owners, facilities managers, municipalities, and snow removal contractors alike,” Carlos A. Oliveras, Head of Insurance at Demex explained. “These businesses are particularly vulnerable. Winters with unexpectedly heavy snowfall boost cost for some and years with little snow destroy revenue for others. Snow insurance serves as a shock absorber for snow-sensitive businesses.”
Demex’s Snow Insurance product has two specific options, first Demex Revenue Protection Insurance where claims are triggered when snowfall is extremely low and that could affect revenues (such as snow removal contractor), and second Demex Cost Control Insurance , where claims are triggered when snowfall is extremely high and that can impact revenues (such as property owners, or facilities).
Parametric in nature, the snowfall insurance products can provide rapid payouts to businesses that are affected either by too much, or too little, snow.
Both of these policies are written on non-admitted paper from Evanston Insurance Company, a subsidiary of Markel.
But underpinning Demex’s snowfall products are capacity from both Nephila’s ILS funds and the global reinsurance market.
Nephila continues to be a direct backer of Demex’s parametric snowfall risk transfer products via derivatives transactions, we understand.
These contracts will be a good fit for Nephila’s weather focused ILS fund strategies, as well as other investment products it offers under the Nephila Climate brand.
Alongside these weather derivatives from Nephila, Demex has also added new reinsurance capacity that sits downstream behind these snowfall insurance products as well.
As Demex scales up, it makes sense for it to broaden and diversify its range of risk capital providers, while Nephila can still access the pure parametric weather risk it seeks for its investor clients.