HDI Global SE & Descartes receive approval to provide parametric earthquake insurance in Japan

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The Japan branch of HDI Global SE, part of Germany-based insurer Talanx AG, in collaboration with Descartes Underwriting, the parametric risk transfer specialist, has received authorisation from the Japanese Financial Services Agency to introduce parametric earthquake insurance coverage to the Japanese market.

To create this product, HDI Global teamed with Descartes Underwriting, a provider of parametric insurance solutions for natural catastrophe risks. The development also involved HDI Enablers, HDI Global’s unit focused on Risk Finance solutions.

According to the announcement, this parametric coverage has been designed to address gaps in coverage for Japanese businesses affected by earthquakes.

The coverage offers protection for various types of losses linked to earthquake events, including property damage, direct and contingent business interruption, and non-physical impacts. The product does not require a deductible or minimum loss amount.

Structured by Descartes, leveraging their expertise in natural catastrophe risk, the insurance coverage operates on predefined criteria. Claim eligibility is determined by seismic intensity readings based on the Shindo scale used by the Japan Meteorological Agency.

Once the set thresholds are reached, a fixed payment is issued based on a simple declaration, with this approach enabling for a faster process compared to conventional insurance models and can also account for non-physical losses. Policy terms, which includes triggers and payout conditions, are outlined in a clear and accessible format.

In addition, this new parametric earthquake product will reportedly be distributed through an expansive network of experienced insurance brokers and agencies across Japan.

Descartes’ Director in Japan, Ikuya Shimada, will act as Descartes local representative for this initiative.

Dr Dirk Höring, Member of the HDI Global SE Executive Board, responsible for Property Insurance, Engineering Insurance, Marine Insurance, HDI Risk Consulting, said: “The Japanese insurance market landscape is in the middle of a structural change. Regulatory bodies are fostering heightened competition amongst major local insurers and encouraging the introduction of new insurance solutions to further improve customer protection.”

Adding: “Acting as the preferred Partner in Transformation for our clients, the timing is ideal to deliver this innovative parametric earthquake solution and address longstanding coverage gaps in the Japanese market.”

Casey Sandler, Interim Managing Director of HDI Global’s Tokyo office, commented: “It is a privilege to be able to provide this much overdue protection to our clients in Japan. The ever-present earthquake risk in Japan remains a challenge for businesses. Now the aspect of a coverage gap is drastically reduced by our innovative parametric solution.”

Violaine Raybaud, Chief Operating Officer of Descartes Underwriting, added: “Descartes is honored to further contribute to the resilience of the Japanese economy, given the suitability of our core parametric approach to earthquake risk. We are pleased to collaborate with HDI Global alongside our strategic partner Generali Global Corporate & Commercial, which will act as a key reinsurer of this new product. Together we have delivered a step-change in earthquake protection to the benefits of Japanese insurance ecosystem.”

HDI Global SE & Descartes receive approval to provide parametric earthquake insurance in Japan was published by: www.Artemis.bm
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