Reinsurer in global earthquake first

Global underwriter Liberty Mutual Reinsurance (LM Re) is to launch the first of its kind building-specific, sensor-based, parametric earthquake (re)insurance product.

LM Re has entered an exclusive partnership with technology provider in seismic sensor and risk management solutions, Safehub, to create a product that will be offered  to clients globally.

The partnership has completed a successful pilot of the scheme in Mexico City, where the sensor-based solution has already been rolled-out for 23 strategic locations to “facilitate rapid and accurate payouts to policyholders”. The scheme will not be expanded worldwide.

Jean-Christophe Garaix, head of agriculture and parametrics at LM Re, said: “We are delighted to partner with Safehub to provide our clients with sensor-based parametric earthquake coverage, offering unparalleled protection in earthquake-prone regions.

“This partnership underscores our dedication to delivering innovative (re)insurance solutions that address the evolving needs of our customers. Our goal is to provide policyholders with a comprehensive solution, offering quicker access to indemnification in the face of seismic events.”

Safehub’s seismic sensor technology captures building-specific real-time data at the policyholder’s building location(s) to trigger parametric (re)insurance policies. The policies are bespoke, offering coverage for specific earthquake event triggers.

LM RE said unlike other parametric products, which rely on general estimates from public agencies this sensor-based solution offers increased accuracy in assessing earthquake impacts at the building site and therefore reduces the basis risk associated with determining payouts.

“The parametric product expedites the claims process and policyholders benefit from quicker access to indemnification in the event of an earthquake. Furthermore, policyholders will receive near real-time alerts and rapid damage assessments to facilitate emergency response and business recovery efforts,” It added.

Andy Thompson, CEO of Safehub, explained: “We are excited to announce our exclusive partnership with LM Re. Earthquake damage is site-specific, with neighbouring buildings potentially experiencing vastly different levels of ground shaking. With this partnership, clients gain access to building-specific data, enabling a more precise alignment of (re)insurance payouts with losses, while also supporting emergency response efforts.”