The new product will use a parametric model
Lloyd’s of London has revealed its new “off the shelf” business interruption (BI) policy for SMEs that aims to protect them against IT disruption or downtime.
Led by Tokio Marine Kiln (TMK), the new product is supported by other members of Lloyd’s Product Innovation Facility, including Renaissance Re.
Trevor Maynard, Lloyd’s head of innovation, said: “We know that insurance products and services have to evolve to respond to the challenges of the Covid-19 pandemic and help our customers cover new or heightened risks that they may encounter now or in the future.
“That is why Lloyd’s Product Innovation Facility and our new Lloyd’s Lab cohort are both looking at ways the industry can do this more effectively. I am delighted to see evidence of this today with the launch of Parametrix.”
Parametrix Insurance removes the traditional indemnity trigger that most insurance policies today use.
The new solution instead uses a parametric trigger that means that the policy automatically pays out if a customer’s critical IT services – such as the cloud, e-commerce, or payment systems – are disrupted.
And this could significantly reduce the time insurers spend assessing a loss or adjusting a claim.
Yonatan Hatzor, co-founder and chief executive at Parametrix Insurance, said: “Businesses have shifted to managing most of their critical IT operations by using third-party service providers, thereby increasing their vulnerability to disruption.
“As a result, critical technology downtime has become the fastest growing risk for businesses today, whether you are a technology company or not. On top of this, the existing claims process in the field is complicated, expensive and time consuming.
“Parametrix’s approach addresses all these issues, providing a solution that saves both time and money, while making tech insurance accessible to new business segments. We are thrilled to launch the first ‘off-the-shelf’ parametric insurance product for IT downtime.
“This is a great milestone for us, and we are grateful to TMK, Howden and Lloyd’s Product Innovation Facility for helping us to develop our product and providing us with valuable insights and support along the way.”
Meanwhile, Tom Hoad, head of innovation at TMK and chair of the product innovation facility, added: “Third party cloud service providers help our clients trade within an ever-changing world and Parametrix have done a great job in developing an insurance product that helps build resilience in this space. We hope that the PIF BETA (comprising TMK, Renaissance Re and others), which is supporting Parametrix Insurance with underwriting capacity, continues to be an effective accelerator for other technology-driven product solutions.”
Howden will also be working with Lloyd’s Product Innovation Facility. David Rees, a cyber broker at Howdenm said: “It is very exciting to work with the Lloyd’s Product Innovation Facility and the PIF BETA led by Tokio Marine Kiln on this ground-breaking project, which combines the best of Lloyd’s product innovation and capacity, as well as working with our market leading cyber capability in Howden Israel led by Shay Simkin.”