What's Happening?
Liberty Mutual Reinsurance (LM Re) and Safehub have introduced a new parametric earthquake insurance solution named 'ShakeNet Parametric.' This product leverages Safehub's seismic sensor technology and risk management expertise to provide highly localized regional shaking maps. The insurance cover is powered by the Global Earthquake Model (GEM) Foundation’s OpenQuake engine, a leading open-source hazard modeling framework. LM Re has joined GEM as a sponsor, reinforcing its commitment to innovation in earthquake risk modeling. The ShakeNet Parametric solution aims to reduce basis risk for parametric re/insurance policies, aligning payouts more closely with actual losses. It is designed to be scalable, allowing for rapid deployment of sensors, and is adaptable for large portfolios, public-private partnerships, or sub-layer reinsurance structures.
Why It's Important?
The introduction of ShakeNet Parametric represents a significant advancement in earthquake risk management. By providing high-resolution regional shaking data, the solution enhances the accuracy of insurance payouts, potentially reducing financial uncertainty for policyholders. This innovation is particularly beneficial in regions with limited post-earthquake information, offering a more reliable risk transfer solution. The partnership between LM Re and Safehub underscores a commitment to leveraging technology for improved disaster response and resilience. This development could influence the insurance industry by setting new standards for parametric insurance products, encouraging other companies to adopt similar technologies.
What's Next?
The deployment of ShakeNet Parametric is expected to expand, with additional sensors being installed at customer locations to enhance the existing network. This expansion will likely involve collaboration with public and private entities to support broader risk management strategies. As LM Re and Safehub continue to innovate, other stakeholders in the insurance and risk management sectors may respond by developing competitive solutions or forming strategic partnerships to leverage similar technologies. The ongoing support for GEM by LM Re may also lead to further advancements in hazard modeling frameworks, benefiting the global community.
Beyond the Headlines
The launch of ShakeNet Parametric may have broader implications for disaster preparedness and resilience. By improving the accuracy of earthquake risk assessments, communities can better plan and allocate resources for emergency response and recovery efforts. This could lead to enhanced public safety and reduced economic losses in the aftermath of earthquakes. Additionally, the collaboration between LM Re and Safehub highlights the growing importance of data-driven solutions in addressing complex environmental challenges, potentially influencing policy decisions and encouraging investment in innovative technologies.
