STORM – Landfall to liquidity in 14 days

Automated Petroleum, an energy provider in Florida, operates throughout the state, leaving them highly exposed to hurricane risk. A strong hurricane has the potential to not only cause damage to their assets but also cause a temporary cessation of their operations, decreasing their revenue and disrupting their bottom line - such losses are largely uninsurable under traditional insurance policies. In the case of a hurricane, quick access to liquidity is important to get business up and running again.

Our customer has been protecting its portfolio with Swiss Re Corporate Solutions' parametric STORM solution since 2021. STORM is a parametric solution that pays out when windspeeds from a hurricane meet or exceed a certain intensity at the insured's location(s). It is designed to closely mirror the customer's observable experience on the ground and provide quick liquidity when they need it most.

Hurricane Ian made landfall as a Category 4 Hurricane on 28 September 2022 near Cape Coral in South Florida. The strongest hurricane to strike the west coast of Florida since Charley in 2004, Ian brought with it sustained winds of 150 miles per hour and high storm surge along the southwest Florida cost. Ian was a life-altering hurricane for the people of South Florida, and many of the citizens who had relocated to southwest Florida in the last two decades had never experienced a major hurricane. Recent population growth in the area meant Ian also impacted areas that experienced a 'building boom' since the early 2000s. To date, insured losses from Hurricane Ian are estimated at over $47 billion[1], making it the costliest (unadjusted) insured loss in the United States.

Hurricane Nicole on the other hand was a rare, late season hurricane. Making landfall near Vero Beach the morning of November 10, it was the first hurricane to make landfall on the east coast of Florida since Hurricane Katrina in 2005, and the first hurricane to make landfall in the United States during November since Hurricane Kate in 1985.  While nowhere near as intense as Hurricane Ian, Hurricane Nicole still caused significant property damage due to persistent storm surge and wave action generated by its expansive wind field. Insured losses from Hurricane Nicole are estimated to be just above $490 million[2].

Within 48 hours of both events, our data provider, Moody's RMS HWind, determined that windspeed intensities at the insured's locations met the thresholds to qualify for payment. Due to the transparent nature of the structure and hassle-free claims process of parametric insurance solutions, the calculated claim amount was received by our customer only 14 days after both hurricanes made landfall. This allowed them to kickstart their recovery efforts almost immediately.

"Our client was very pleased with the performance of their parametric insurance purchase. The simple and straight-forward claims process enabled them to recover insurance proceeds soon after the event, and initiate their post-Ian and post-Nicole recovery efforts."

Dawn Gordon, Brown and Riding

“The Parametric STORM program was tailored to the client's geographical distribution of exposure by placing the intensity calculation locations where the client has assets. This design provided coverage across all areas within the peninsula where the insured has property. After facing almost back-to-back wind events in Florida in 2022 we were able to work hand in hand with the insurer and our underwriting team to expedite the claim and payment to the insured. Our client received their insurance proceeds within the two weeks after each storm, allowing them to quickly start funding expenses incurred by the hurricanes.”

Anna M. DeVito, Gulf Coast Underwriters

“After our properties were damaged or destroyed by Hurricanes Ian and Nicole, we were amazed at how quickly Swiss Re Corporate Solutions processed the claim, based on the terms of our parametric STORM policy. The end-to-end claims process, from notifying the insurer we were impacted by Ian and later Nicole to receiving the proceeds directly into our bank account, was fast and efficient and aided us in getting our repairs handled and paid quickly.”  

Kathy McKnight, Automated Petroleum