Fresh from success at Lloyd’s Lab, the MGA has ambitions to provide ‘a more holistic solution to cover any type of downtime’, says chief executive
It’s the stuff of nightmares for business owners.
Staff come into the office one morning, fire up the computer and discover that they can’t access anything. No emails, no documents and, worst of all, no trading for the day.
It’s not even the company’s fault - the expensive, cloud-based software it purchased is down because the software’s server has failed.
In the past, firms would have just licked their wounds and counted the lost revenue.
Nowadays, however, thanks to technology firms such as Parametrix, help is at hand. It offers downtime insurance to help cover the costs that result from these types of third-party server failures.
Parametrix co-founder and chief executive Yonatan Hatzor believes the insurance industry is at the start of something special when it comes to covering this niche risk.
Downtime, the period of time when systems are unavailable due to an error, costs $700bn (£570bn) a year, he tells Insurance Times.
His firm, therefore, offers pre-agreed payments for when downtime strikes. Parametrix aims to pay claims quickly using a parametric model – once certain pre-determined triggers are hit, the claims payments are automatically sent through to the customer.
“The market is definitely huge,” Hatzor says.
“Think about the losses that businesses experience every year. Not all of this you will want to insure, but we’ve done the correlation. You have around $60bn (£49bn) of potential premium for this market segment.”
Parametrix is an MGA, with capacity from Lloyd’s of London syndicates.
Hatzor says the company’s model is great for both customers and carriers.
“[Customers] know exactly how much they want to get in the case of downtime. They can then plan ahead when they want to mitigate a disaster scenario.
“And on the carrier side, you don’t spend so much money on claims processes, investigations, forensic teams. Everything is efficient.”
Business origins
Parametrix is unique when it comes to parametric policies covering downtime. But how did this business come about?
Hatzor was originally a tech developer. He founded a business eight years ago, Matter Software, that sought to combine both the physical and virtual world.
Having tasted entrepreneurship, Hatzor wanted to do something even bigger.
In 2019, he teamed up with like-minded tech businesspeople Neta Rozy, Ori Cohen and Tamir Carmel to start Parametrix.
“Because I came from a tech background, I really knew about the problem of downtime, especially for business-to-business software as a service (SaaS),” he explains.
“You have such huge commitments to your clients and when you face downtime, it’s usually a disaster for the company.
“Three out of the four [Parametrix] co-founders already [had] some experience on how to build a profitable business.
“And that was the start. We really wanted to be focused on a big problem and not a solution.”
Power of Lloyd’s
Hatzor is hugely grateful for the support he has had so far from the UK insurance industry – especially Lloyd’s of London.
In 2020, Parametrix beat off competition from a wide range of companies to be selected as one of nine startups to participate in its Lloyd’s Lab programme, an innovation scheme to nurture insurtechs to maturity.
Last year, Parametrix closed a $17.5m (£14.3m) funding round.
“The Lloyd’s Lab and the experience was amazing. It’s definitely changed the face of the company because we did it so early, before we even approached the market, so it really helped us,” Hatzor says.
“We still utilise the same connections from the Lloyd’s market right now, all the time - getting to more syndicates and the best underwriters. It’s been a very strong network.”
The strength of the Lloyd’s name has helped Parametrix take its policies global.
Hatzor continues: “Because we represent the Lloyd’s market, the policies can be shown almost across the board.
“We’re licensed to sell in the US, a few countries in Europe – Germany, Austria and Italy – and also in Israel.
“Also, we have an operation in Japan with [insurer] Sompo [International] - more like a white label approach, [it] basically provides our coverage in Japan.”
Looking to the future, Hatzor is keen to expand Parametrix outside of external downtime provision, which is when a server fails.
He explains: “Currently, Parametrix is focusing on external downtime, but the vision of the company is to provide a more holistic solution to cover any type of downtime.
“We have already started to fulfill this vision, but our off-the-shelf product is downtime insurance against the downtime of cloud services, so the big public cloud services Microsoft Azure, Google Cloud and Amazon Web Services.”
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