FloodFlash, an insurTech startup that offers a new way for customers to insure previously uninsurable flood risk, has raised £1.9m in seed funding from LocalGlobe, Pentech Ventures and InsurTech Gateway.
FloodFlash has developed a tech-led approach that makes flood insurance available to everyone, including those with the highest flood risk.
A FloodFlash policy pays out a pre-agreed, fixed sum as soon as a pre-defined level of flooding occurs. The flood triggers an internet-connected water-sensor and the payment is made immediately to the policy holder. The FloodFlash policy is an example of parametric or “event-based” insurance: settlement is made based on a pre-defined triggering event as opposed to the cost of damages.
The latest data show that every year there are $50bn of losses caused by floods around the world. Currently, only $9bn of these are covered by insurance. FloodFlash’s pioneering approach is the first of its kind in the sector and means that personalised and competitive flood policies can now be written for the highest-risk locations around the world.
Founders, Adam Rimmer and Ian Bartholomew, created the company following a combined eleven years modelling and structuring of parametric catastrophe bonds. These are typically used by large corporations or governments to recover large sums in the event of a catastrophe, but many of the benefits they confer were previously unavailable to small and medium sized enterprises.
Adam Rimmer, co-founder, says: “Every year tens of thousands of business owners lose their livelihoods because they have been unable to take out an affordable policy that protects their business. In the immediate aftermath of a catastrophic flood, people care less about dollar-for-dollar reimbursement for damages and more about whether their business will survive at all. We want to make the world more resilient to catastrophic events and we believe FloodFlash’s event-based insurance is absolutely the best way for insurers to cover higher-risk areas.”
Ian Bartholomew, co-founder, comments: “The efficiencies in the technology that we have developed make FloodFlash policies available to those who need it most. The FloodFlash sensor and high-resolution pricing algorithms are essential parts of that. We think that by pricing risk in this way, and by promising instant settlement, we can help to resolve what is arguably the largest market failure in insurance.”
FloodFlash is regulated by the FCA and is currently carrying out a live pilot for its policies with a select group of SMEs in parts of the UK with significant flood risk, including Carlisle.
Insurance capacity for FloodFlash policies is provided by Everest Re through their syndicate at Lloyd’s of London. The company is becoming a coverholder at Lloyd’s, giving it the ability to underwrite and issue a larger number of policies.
The startup has been working as part of the InsurTech Gateway, the InsurTech focused incubator since mid-2017. The company currently employs five people but expects to double that number over the next six months, as it prepares for product launch in October. The growing team already includes published scientists, expert insurance software engineers and a former Dyson product designer.
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