Insurtech Floodbase has partnered with specialised crop and farm underwriting system and service provider Ag Guard to deliver parametric flood insurance to cover agricultural risks in Australia and New Zealand.
The pair will jointly develop parametric flood insurance programs focused on the agricultural sector in the region, with Ag Guard leveraging its specialised local knowledge, expertise and reach in the region for distribution, while Floodbase will bring its advanced flood mapping technology and ability to construct and calibrate parametric triggers for flood and other risks, as a data provider and reporting agent for the parametric triggers.
The move comes on the heels of some significant flood events for both Australia and New Zealand, with both countries having been affected by major events over the last year or so.
Given the challenges related to the frequency and severity of flood events, as well as terrain related issues that can prolong the flood indemnity insurance claims process, the two companies believe, “Without government intervention or a new approach to flood insurance, economic loss will continue to wreak havoc across the region.”
The goal, as with any use of parametric insurance triggers, is to create a flood insurance offering that has flexible structures, while providing clients with rapid payouts without lengthy claims adjustments.
Launching next year, the parametric flood insurance programs are expected to offer region-specific pricing, with payouts that trigger automatically when the magnitude of flooding exceeds predetermined thresholds.
It’s seen as a way to provide reliable, large-area flood insurance coverage, offering both farmers and governments protection against agricultural risk and flood-induced economic loss.
“Floodbase provided us the flood data and expertise we needed to design the country-wide parametric programs launching early next year. Our offering will enable New Zealand farmers to purchase flood covers that were previously unavailable, drastically reducing the risk of insolvency and agricultural instability. We couldn’t be more excited about the opportunity to complement indemnity insurance, help close the flood insurance gap, and bring comparable programs to Australia,” explained Alex Cohn, Co-owner and Managing Director of Ag Guard.
Floodbase also recently teamed up with African Risk Capacity Limited (ARC Ltd.) to develop, distribute, and scale parametric flood insurance products for Africa.