Policy pays out automatically if set weather event happens

A new managing general agent has launched a weather-based insurance policy that pays out automatically without the need to prove a financial loss.

Excessweather, run by former QBE Re senior underwriter John Warwick and chaired by ex-Aviva Investors chief operating officer John Hodgson, was launched this week with underwriting capacity from five insurers, including ILS Capital.

It takes publicly available information from weather stations and works with rating firm Celsius Pro to work out a price for the policy.

The products are then sold to brokers or insurers which want to bundle weather risks in certain areas or for particular client types.

Celsius Pro already works with one Lloyd’s broker, but Warwick said his firm would take distribution far wider.

“Our aim over the next few months is to develop a network of brokers and assist them in explaining our products to their clients. We want to open up what has until now been a market open to just the biggest broking players to everyone,” he said.

While Excessweather will write policies globally, it aims to get half its business from UK firms, Warwick said.

He said that firms would be attracted by the certainty of a pre-agreed premium and claim figure, which means it would pay claims within 14 days of a weather event.

“Weather is a major driver of corporate profit and loss. But until recently policyholders have only been offered weather as a standard risk, and faced complex disputes about severity and loss values, which take a long time to resolve,” he said.

Excessweather is in advanced talks with a worldwide grape grower and wine producer to create a policy to cover weather events on different parts of the crop cycle, Warwick added.

Excessweather will initially operate as an appointed representative of Independent Broking Solutions.

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