ESA and Liberty Mutual Reinsurance (LMRe) signed an agreement this week to kick off a three-year collaboration exploring how space data can be used to create parametric insurance solutions for terrestrial assets.
The agreement is a lot more exciting than it sounds, especially for EO and analytics companies on the continent, which stand to benefit from ESA support and funding in helping to bring an insurance solution to the market.
Mutually beneficial: The partnership will begin in February with an LMRe-led workshop, where the reinsurer will outline the problems facing the forestry industry, and detail the increasing risks from climate change in the form of windstorms, wildfires, invasive species, and power outages.
LMRe will then invite the commercial sector to pitch its solutions. The group has put out the call for SAR, optical EO, AI, and analytics firms—as well as businesses with ground-based wind modeling services—to participate.
LMRe hopes the collaboration will build a parametric insurance product, which will use data to immediately trigger a payout to claim holders when certain criteria are met. The idea is to completely remove humans from the insurance equation.
While traditional indemnity insurance requires detailed loss assessments and costly claims processes, the parametric alternative automatically sends out money to policeholders when wind speeds surpass a given threshold, or when EO sats confirm forest damage from orbit.
Long time comin’: The announcement is great news for the insurance industry, which can use the new parametric product to increase its coverage capabilities, and the efficiency of its claims processes. But the announcement is also a potential boon for the EO sector, which has long tried to educate the insurance market on the value of their data.
“This is a smart move. There’s ample past practice demonstrating the effectiveness of satellite geospatial data in quantifying environmental risk across property and casualty lines,” Yukun Yin, founder and CTO of Charter Space, which launched its own insurance product for space assets last year, told Payload. “It’s a reflection of the growing maturity and breadth of the satellite imaging market itself, as EO data becomes a core input across an expanding range of use cases.”
