While there are several merits to parametric insurance, it can be difficult to know whether a parametric policy is the right solution for your clients. Here are 4 case studies where Bounce has helped close the insurance gap for a range of businesses across New Zealand.
What is the problem? Undertaking construction in a seismically sensitive region with a projected contract value at completion of $60m and a 10% deductible on their Contract Works Insurance creates an excess of up to $6m on a sum insured of $60m (insurance gap). Slim construction margins leave little financial capacity for the unexpected.
Solution: Bounce closed the gap by providing a $5.5m parametric earthquake policy. This payout can be used to cover emergency repairs, enhanced foundations, costs of inspections, costs of delays, and increased costs of labour / materials. Importantly, the Bounce cover provided confidence and additional comfort to the lenders and investors about the financial resilience of the project.
What is the problem? A large wood panel manufacturer with an aggregate sum insured of around $100m and a 10% material damage and business interruption seismic deductible creates an excess of up to $10m (insurance gap). This is a large employer in the region and is the mainstay of the local community.
Solution: Bounce provides a $2m parametric earthquake policy. This payout can be used to cover initial repairs, support staff, and bridge production disruption on their balance sheet. Importantly for the region, our parametric policy also provides capacity for the employer to support their staff which helps to strengthen financial resilience in the community.
What is the problem? New build of 80 apartments in known seismic region with total sum insured of $40m and a natural disaster excess of 5% which creates an excess of up to $2m (insurance gap) for apartment owners. The primary challenge in an earthquake disaster concerns financial impost of owner contribution to cover the gap and the friction, conflicts and arbitration.
Solution: Bounce provides partial cover of the gap with a $500,000 parametric earthquake policy. In the event of a large earthquake, Bounce funds are available to support the Body Corp with immediate emergency repair, reinstatement of common and shared areas, technical reports and claims preparation. Importantly for this Body Corp, a parametric insurance cover provided by Bounce helps remove conflict and arbitration for the apartment owners.
What is the problem? Professional Service firms are typically very well covered for all types of impacts and imposts to their businesses, however in a hardening insurance market and rising premiums, many firms are looking for new solutions. For this accounting business, the cost of the “natural disaster” component of the Business Interruption policy, and the complexity of claims response constituted an expensive benefit. The firm also acknowledged that since COVID many staff can now work remotely mitigating some of the impacts of being tied to an office location.
Solution: The Accounting firm replaced the "natural disaster" option of their BI policy with an Bounce parametric policy providing cover of $1,000,000 in the event of an earthquake with a ground movement of at least 20cm per second. This shift resulted in a premium saving of around 50% and ensured that they had access to rapid cash flow when triggered by an earthquake crisis. The Bounce payment can be used for any recovery related expense such as emergency repairs, staff support, business recovery, and marketing and customer communications. Importantly for this accounting firm was the ability to demonstrate resilience, retain client trust, and grow their reputation.
