Insurtech startup FloodFlash raises £1.9m funding
London-based FloodFlash, a startup that wants to offer insurance for previously uninsurable flood risk, has raised £1.9 million in seed funding from LocalGlobe, Pentech Ventures and InsurTech Gateway.
Everest Re is providing insurance capacity for FloodFlash policies through their syndicate at Lloyd’s of London. The startup is becoming a coverholder at Lloyd’s, giving it the ability to underwrite and issue a larger number of policies.
The insurtech firm claims to have developed a tech-led approach that makes flood insurance available to everyone, including those with the highest flood risk. A FloodFlash policy works as a parametric insurance as it 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 policyholder.
FloodFlash is currently carrying out a live pilot for its policies with a select group of small and medium-sized enterprises (SMEs) in parts of the UK.
Data show that every year there are $50 billion of losses caused by floods around the world while only $9 billion of these are covered by insurance, according to FloodFlash.
The insurtech founders Adam Rimmer and Ian Bartholomew created the company following a combined eleven years modelling and structuring of parametric catastrophe bonds.
“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,” Rimmer said. “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.”
Bartholomew added: “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.”
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