Climate change can influence the frequency and intensity of excessive precipitation – driving significant business interruptions, damages, and human impacts across the globe. For highly exposed industries, such as the agricultural sector, too much precipitation can cause just as much damage as excessive heat and/or drought.
In 2022, parts of Australia endured significant rainfall, marking it as the wettest year on record for the country’s east coast, with over USD 9.2 billion in insured losses. Meanwhile in the northern hemisphere, five US states experienced destructive flash floods as the result of separate 1-in-1,000-year rainfall events which occurred within a 5-week period. In China, severe rain events caused deadly floods, resulting in almost USD $70.4 million in losses.
As corporates face continued exposure to excessive precipitation, traditional modeling and insurance products miss the mark, offering limited and highly priced means for clients and their assets. Descartes provides a new generation of insurance protection against adverse weather and excess precipitation. Using in-house algorithms, machine learning, IoT and climate models derived from gridded satellite data, we provide agribusinesses, contractors and corporates with bespoke, first-in-class parametric coverage against excess precipitation anywhere in the world.
Our proprietary model for excess precipitation uses a combination of high-resolution satellite data, IoT, excess precipitation datasets, enabling us to provide an unparalleled assessment of corporates’ risk exposure.
In full collaboration with the broker & client, we design a customized cover that is structured to payout based on third-party data and index of cumulative precipitation. Structures are calibrated to each insured asset, construction project stage or crop type, and we monitor the risk using cumulative precipitation data.
Our revolutionary adverse weather product provides capacity for various contractors, developers, suppliers and agribusinesses all around the world.
Client Need: A contractor in San Antonio, Texas experienced major project delays due to the excess rainfall in May 2021. The adverse weather conditions caused significant delays on their project and impacted their employee budget, as it forced work suspension.
Pain Point: With no option for insurance coverage from the traditional market, the heavy rainfall caused delays beyond what the contractor had anticipated in their contract.
Our Solution: With increased awareness of their ongoing exposure to adverse weather, the client & their broker opted for a parametric policy to cover their next project. It was the only policy on offer that could provide cover for weather delays that exceeded the initial contract.
The Result: The total project budget remains the same, but with the insurance coverage in place the company is financially protected up to their maximum rainfall exposure. With the policy in place, if the May 2021 event was repeated, they would receive the total daily limit for additional adverse weather days that exceeded their initial contract budget of 20 days. The fully-customized parametric cover fills the gap left in the traditional market and ensures efficient financial recovery and return to normal operations.
