Descartes launches its parametric cyber insurance in Germany — Descartes
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Descartes launches its parametric cyber insurance in Germany
2024-06-07

Descartes launches its parametric cyber insurance in Germany

Since its creation in 2018, Descartes has remained committed to its mission of providing financial protection for companies and governments around the world against natural catastrophes and climate risks, all through transparent insurance and rapid compensation following a triggering event;

The European-born company, founded by experts in the insurance, new technology, and climate sectors, already has a worldwide presence, with offices and a client network spanning North America, Asia-Pacific, Australia, Europe and the UK;

In 2024, the company is accelerating its ambitions further, and this year is once again aiming for growth of over 50%, well in excess of 200 million in premium, more than a third of which will come from the United States. Supported by its proprietary models and one of the industry’s largest teams of natural peril specialists – with a high volume of recruitment anticipated, around a hundred employees over the coming months – the company aims to reach 500 million in annual premiums in the next few years.

Five years in, Descartes has made quite a name for itself: fourteen offices in nine countries, $141 million raised and in partnership with brokers, more than 400 corporates and institutions insured worldwide. The solutions offered by Descartes meet a wide range of needs, and represent the financial backbone for many strategic assets and projects. The company insures French manufacturers against flooding on the Seine, Somali farmers against drought, solar farms in Texas against tornadoes and hail, and major infrastructure networks in New Zealand against earthquakes, to name a few examples… ;

Descartes specialty? Real-time assessment and coverage of threats linked to climatic phenomena, using in-house models (developed by Descartes using advanced technologies: machine learning, artificial intelligence, satellite images, etc.) to build customized covers that provide a broadened scope of financial protection for companies. Descartes relies primarily on a parametric approach to insurance, which significantly improves prior knowledge of the risk covered, and consequently claims settlement times in the event of a claim;

Building on its success, Descartes is now expanding its capabilities to another major emerging risk: cyber attacks. Built from the same data-driven standard of excellence and using its own proprietary cyber risk model, the company is launching the first parametric cyber solution in Germany, aimed at small and medium-sized businesses in the range of EUR 50 million to approx. EUR 1.5 billion., particularly in the manufacturing and retail sectors, as they face increased risk of ransomware attacks. Descartes’ cover addresses the concerns of finance and information system security departments to protect their critical assets in the event of a cyber-attack, which can not only impact their information systems, but also generate significant operating losses due to business interruption.

Descartes, expanding beyond climate to emerging risks.

Since 2018, Descartes has built up one of the world’s largest teams of researchers and modelers specialized in natural perils. Comprising almost 250 climatologists, data scientists and software engineers, it works tirelessly to deepen knowledge of natural catastrophe and climate risks. “Our research team – which is constantly expanding – is also working on other sectors that can be better covered thanks to increasing data advancements,” explains Kevin Dedieu, co-founder and Chief R&D Officer of Descartes.

For Tanguy Touffut, co-founder and CEO of Descartes: “We build solutions for what is difficult to insure. Since 2018, we have seen that the parametric insurance model is uniquely primed to effectively protect companies against climate risks. We are now looking to apply this know-how to one of the other major threats facing businesses: cyber risk.”

With the launch of its parametric Cyber Shutdown Cover solution, Descartes is demonstrating its ambition to gradually extend its scope to emerging risks beyond just natural hazards.

Tanguy Touffut adds: “Data and algorithms are at the heart of our business model. This is a momentous milestone for our company, as it marks the beginning of entry into new verticals linked to emerging risks.”

How will Descartes insure against cyber risks?

Today, the cyber exposure landscape is crucial for small and medium-sized businesses. According to a recent French Risk Management Association AMRAE (L’Association pour le Management des Risques et des Assurances de l’Entreprise) study, 9 out of 10 SMEs were not insured against Cyber risk in 2022. Yet a ransomware attack generates an average 21-day business shutdown, with an estimated daily operating loss of €800,000. Following a cyber encryption attack, companies must mobilize considerable resources to diagnose the attack, restore its information system and restart business operations.

By applying its expertise in parametric models to cybersecurity, Descartes assesses the company’s vulnerability upstream, and defines in advance with the customer and his broker a compensation amount per day of business interruption. As a result, the proposed insurance policy offers coverage adapted to the financial cost of business shutdown, customized according to the policyholder’s profile, and the possibility of being compensated within a record time after an encryption attack.

Thanks to our parametric models, we help customers calculate the amount of their financial losses in the event of business interruption, as soon as they take out the policy. This predefined parameter, combined with a very simple contract, enables us to intervene immediately after the attack. Thus drastically reducing its impact, especially considering that we can compensate our customers within 3 weeks of the resumption of activities, when traditional insurance requires several months before confirming coverage levels“, says Louis Bollaert, Chief Commercial and Marketing Officer at Descartes.

With its cyber shutdown insurance, Descartes contributes to the resilience of small and medium-sized companies, now beyond weather and natural disasters. “We are very happy about this development! Parametric insurance is still largely uncharted territory in Germany, but with the addition of the cyber insurance line, it is once again clear how high the value contribution of this concept is in modern risk management. With the upcoming implementation of the NIS2 Directive in October 2024, which aims to strengthen the cyber security of European companies, Descartes’ cyber shutdown cover offers an innovative solution tailored to the most important assets of companies that are not sufficiently equipped as well as those that comply with the directive. Our model is also particularly interesting for companies that have already been the target of attacks, because the cover is also available for companies that have suffered damage in the last 18 months. In contrast to many conventional insurance models, we include within the calculation and design of the cover the cybersecurity mitigation measures that have been put in place after an attack,” concludes Mario Tucholke, Commercial Director at Descartes for Germany.

About Descartes:

Descartes was founded in 2018 by a team of insurance experts, climatologists and data scientists, under the principle that new technologies can deeply transform the insurance industry, reducing friction and restoring trust in the market. This is particularly pertinent given the rise in exclusionary language used in traditional policy wordings – which has brought unease and frayed trust among Insureds. Comparatively, Descartes’ policies and their straightforward structure provide unveiled transparency for clients in ‘what they see is what they get’. Core to the value proposition of parametric insurance is the ability to increase the certainty between a loss event taking place and a pay-out being made, quickly, accurately and without friction costs.

Today, the Descartes Group comprises Descartes Underwriting, the underwriting agency specializing in climate insurance products, and its insurance subsidiary Descartes Insurance, which has been approved by the Autorité de Contrôle Prudentiel et de Résolution (ACPR) since 2022. Backed by a panel of leading reinsurers, in collaboration with brokers, Descartes is paving the way for the economic resilience of tomorrow.

For more information contact Descartes Insurance at: descartesunderwriting.com and follow us on LinkedIn.

Media Contact:

Marie-Anne Faidy
marie-anne.faidy@descartesunderwriting.com