AEGIS London unveils parametric cover for businesses affected by shootings in Dallas

Lloyd’s insurer  AEGIS London has unveiled a new parametric insurance product to protect small businesses against economic losses following a shooting or other violent incidents.

INSDEX Active Response, the first product of its kind to be launched by the syndicate, provides coverage to businesses that lose business due to a shooting or malicious incident within 250 metres of their premises.

It is targeted initially at SME businesses in the Dallas area for portfolios of up to 10 properties. AEGIS London hopes to roll it out to other states, with California and Florida next on the list.

The product is distributed through partner brokers via AEGIS London’s Opal platform, and was developed in conjunction with Skyline Partners, a recent graduate of the Lloyd’s Lab. Skyline’s parametric platform monitors open-source data from the Dallas Police Department to identify when a triggering event has taken place.

Within 48 hours of relevant data being published by the Dallas Police, policyholders will be notified that an insured event has occurred and asked to confirm that, as a consequence, they have suffered a loss. AEGIS London aims to make payment within 14 days of the event. Limits are flexible up to $50,000 per event, or a maximum of $500,000 per policy holder.

Limits are capped at 10 percent of an insured’s annual business interruption values or rental income to minimise positive basis risk and ensure the product is treated as insurance.

SMEs are typically the most financially exposed to this type of crime, explained Calum Williams, terrorism underwriter at AEGIS London, given they are often uninsured but can face claims after a violent incident on or near their property.

“If their reputation suffers or trading is reduced following an event of this kind, many will face an insurance gap, particularly as some intangible assets are difficult to claim for under traditional insurance policies,” Williams said. “Even those with insurance often have high deductibles because events of this nature have become so commonplace.”

Shooting events are estimated to cost the US economy $229 billion annually, according to a 2019 Joint Economic Committee Report. There have been 520 shootings in Dallas in the calendar year ended May 31, according to Dallas police figures. That is up from 430 in the same period the previous year.

AEGIS London’s parametric group said it is considering developing more parametric solutions for other situations where a reputable data set is available and where there are clearly identifiable insurance gaps.

Laurent Sabatié and Gethin Jones, Skyline’s co-founders, said: “The product is proof of our structuring capabilities, INSDEX technology and innovative approach to developing new parametric products for new markets.”

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