New parametric hurricane cover to tackle $50bn protection gap in Caribbean
Parametric insurtech Yokahu has partnered with four brokers in the Caribbean to offer a microinsurance product aimed at closing an estimated $50 billion protection gap in the region and improving the resilience of local families and businesses in the run-up to the hurricane season.
Launched ahead of hurricane season, which starts on June 1 in the Atlantic, the innovative parametric approach allows for faster payouts, typically within 24 hours, without policyholders needing to lodge a claim or deal with loss adjusters in the event of a major storm.
In the event of wind speeds reaching over 74 miles per hour above an insured location, funds – currently up to $10,000 depending on the strength of the hurricane – are transferred directly to the claimant to cover emergency expenses such as buying food and water, repairing a home or securing a power supply.
Yokahu is working with four key insurance brokers based in the Caribbean - BCMG Insurance Brokers Limited in Jamaica; Colina General Insurance Agents and Brokers in The Bahamas; W J M Holdings Inc in Saint Lucia; and Caribbean Risk Group LLC in the US Virgin Islands - for the distribution of the solution.
Tim McCosh (pictured), CEO and founder of Yokahu, said: “Uptake of hurricane insurance in the Caribbean is low and yet these communities are disproportionately at risk to the impacts of hurricanes. Yokahu is aiming to increase access to hurricane protection for everyday people by providing affordable parametric-based policies.
“One of the key takeaway actions from COP26 was the ongoing urgent need to improve financial access for vulnerable communities but insurance products continue to be unaffordable in the main for those communities that really need this protection. So we are delighted to be partnering with our first four brokers in the Caribbean to offer our microinsurance product and begin to change this paradigm.
“Working together, we can help to make effective hurricane insurance across the Caribbean more affordable and take steps to tackle the region’s estimated $50 billion protection gap.
Premiums through Yokahu start at just US$5 per month, and when a hurricane hits a person’s home, they automatically receive pre-agreed pay-outs when certain triggers are met. There is no claims process – and customers, therefore, receive funds immediately.”
Ian Miller, chief technical director at BCMG Insurance Brokers, said: “In 2021 alone, seven hurricanes of which four were major, swept through the Atlantic. Evidence is suggesting that hurricanes are becoming more powerful and more widespread; for those most vulnerable communities, insurance against such impacts is vital – particularly as the Caribbean is disproportionately impacted by hurricanes.
“Thanks to its low premiums, and the fact the product is entirely digital, Yokahu hurricane policies are more accessible to a greater number of people, and because funds are automatically paid following a hurricane, rebuilds can begin immediately, helping stimulate growth for both the local community and wider economy. From the insurance point of view, the beauty of the transparency of the parametric trigger makes everything clear for policyholders.
“We and our broking colleagues at the other three firms are also excited to be able to offer this product as a form of employee benefit and look forward to encouraging local businesses, especially hotel groups, to take up Yokahu hurricane protection for their employees, which in turn will also help lower the financial impact following a hurricane in the region.”
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