A groundbreaking parametric earthquake insurance solution has been introduced through the collaborative efforts of Liberty Mutual Reinsurance (LM Re) and Safehub, a leader in seismic sensing and risk management. This innovative offering, named ShakeNet Parametric, is designed to substantially mitigate basis risk, a common challenge in parametric insurance where the trigger for a payout might not perfectly align with the actual financial impact experienced by the insured party. By harnessing sophisticated technology and comprehensive data, this product aims to deliver more precise and timely financial relief following seismic events.
The core of this new insurance product is Safehub's proprietary ShakeNet technology, which integrates data from Safehub’s expanding network of specialized sensors with information from existing governmental seismic monitoring systems. This integration facilitates the creation of highly localized and detailed regional shaking maps, providing an unprecedented level of granularity. The data is then analyzed using the Global Earthquake Model (GEM) Foundation’s OpenQuake engine, an open-source framework recognized for its advanced hazard modeling capabilities.
A key advantage of ShakeNet Parametric is its ability to provide science-backed shaking maps that directly address and reduce basis risk. This ensures that payouts are more accurately correlated with the true extent of losses suffered by policyholders, thereby enhancing the reliability and effectiveness of parametric insurance. Clients benefit from the inherent speed and transparency of parametric policies without compromising on the accuracy of claims settlement. Furthermore, Safehub's scalable technology allows for rapid deployment and densification of sensors, enabling the provision of risk transfer solutions even in areas with limited post-earthquake data. Clients also have the flexibility to install additional sensors at specific locations to customize coverage precisely to their unique exposures.
This initiative builds upon a previously established exclusive partnership between LM Re and Safehub in 2024, which focused on developing sensor-based parametric earthquake re/insurance products for a global clientele. The collaboration further strengthens with LM Re joining the GEM Foundation as a sponsor, aligning with Safehub's long-standing commitment to the foundation. This collective endeavor underscores both organizations' dedication to advancing the field of earthquake risk modeling and delivering cutting-edge solutions to the market.
Jean-Christophe Garaix, Head of Agriculture and Parametrics at LM Re, emphasized that this partnership merges LM Re's deep reinsurance knowledge with Safehub's advanced monitoring and mapping capabilities. He highlighted that ShakeNet Parametric provides robust, scientifically validated insights for quicker and more intelligent responses to earthquakes, reinforcing LM Re's dedication to innovative, data-driven client solutions. Andy Thompson, CEO of Safehub, added that their extensive sensor networks and rapid deployment capabilities in emerging markets allow them to generate the most detailed regional shaking maps globally. He stated that combined with LM Re's reinsurance acumen, this technology represents a new frontier in earthquake risk management, offering unparalleled precision and efficiency.
