General Insurance Article - Axa's all-weather cover allows companies 'to bet' on weather

THE insurance giant Axa is allowing companies to bet on the weather, with cover that pays out after certain climate events even if no damage is caused.

 Axa said its "parametric" insurance will protect low-income farmers in Africa from the effects of extreme weather, but will shortly be extended to some companies in Europe who are also exposed to the elements.

 The insurance will be offered in Africa through cooperatives and government schemes, in tandem with the World Bank's Global Index Insurance Facility, to pay farmers if the temperature rises or falls by an agreed amount, or a certain rainfall threshold is met.

 Axa's initial reinsurance capacity for the scheme is about 50m euros (37m pounds). It said many farmers in Sub-Saharan Africa, where 40pc of the economy is tied up in agriculture, cannot afford more traditional forms of insurance to cover losses if crops fail. "Nobody can really predict the weather beyond 15 days. We are not about forecasting the weather; it's more about dealing in probabilities and data," said Tanguy Touffut, head of Axa's corporate solutions.

 Weather hedges are already offered by Swiss Re, and the state-backed African Risk Capacity last year created a parametric insurance pool to cover weather-related crises.

 Axa has gone further by paying for data feeds from several satellite operators to monitor crop patterns across vast areas, picking up early signs of drought, flooding or crop failure. This data enables the firm to gauge the risk for large numbers of small customers, making the insurance more affordable.

 Last month, the World Economic Forum said the environmental risk of extreme weather events was the second-biggest global risk in terms of likelihood.

 (c) 2015 The Telegraph Group Limited, London

Back to Index

Similar News to this Story

Smaller insurers to benefit from new Solvency UK thresholds
PRA update increases gross written premium income threshold, by a further £10 million compared with original proposals, to £25 million. Insurers opera
Firms facing unprecedented polycrisis of risk
67% of leaders surveyed say that the risk landscape is now ‘many times more complex’ than it was just three years ago at the height of the covid crisi
Cascading effect of natural disasters and key emerging risks
The 2024 edition of Swiss Re's SONAR report features 16 emerging risks and their potential impacts on the insurance sector and society. Key risks

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS


Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.