Howden launches Climate Parametrics practice to de-risk climate transition
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Howden announces the creation of Howden Climate Parametrics, a global practice that brings together (re)insurance, climate, and data expertise to focus parametric risk transfer solutions on meeting the escalating demand for climate de-risking capabilities across industries, financial markets and public sector.
The practice brings together over 30 specialists from across Howden and the Group’s underwriting business, DUAL, combining climate, analytics and advisory, structuring and placement, (re)insurance, underwriting and capital markets expertise. Co-chairs Philipp Kusche, Global Head of Insurance Linked Securities (ILS), Howden Tiger in New York, and Rowan Douglas CBE, the recently appointed CEO of Howden’s Climate Risk and Resilience team based in London will co-lead the practice.
Pioneered in the reinsurance and energy markets, parametric insurance offers pre-determined pay-outs based on specified trigger events. A unique benefit is the speed and transparency of these pay-outs, which is essential for financial institutions looking to hedge exposure to weather, carbon or commodity risks and humanitarian agencies seeking urgent resources after a disaster. Parametrics, often enabled by satellite data, can help provide financial protection in emerging and frontier markets and are fast growing market share. They are well suited to many climate risks, including natural catastrophes and the performance of carbon markets.
The growing climate demand is transforming the potential scope and scale of the parametric market. The universal push from regulators and investors to disclose climate risks, together with burgeoning high quality data sources, will accelerate this. Howden’s new practice will be part of the solution, delivering opportunities to help parametrics fulfil its potential to de-risk the resilient net zero transition and protect natural capital.
The practice will harness Howden’s sector acumen, key partnerships, data, analytics and modelling resource to drive technical innovations across resilience and decarbonisation. It will bring together reinsurance and capital markets to create parametric products that build resilience to multiple hazards for corporates and communities. This builds on the solutions that Howden and its partners have already delivered; protecting smallholder farmers in Jamaica and Africa, those living near 10 active volcanoes, two marine protected areas in the Philippines and Belize, as well as agriculture solutions delivered by DUAL in South America.
Rowan Douglas, CEO Climate Risk and Resilience, Howden said: “The curiosity and excitement surrounding parametrics as part of the climate solution, was palpable at New York Climate Week in September. From infrastructure to agriculture, urban resilience to mangroves, through to the carbon markets, everyone wants to learn more, but this wider curiosity is often matched by confusion. It is a new area for many in the climate mainstream with strange jargon and different concepts. Howden has made a pioneering move to combine its climate, parametrics and sector expertise into a unified global practice. As part of our client commitment to de-risk their resilience to climate change and low carbon futures, Howden Climate Parametrics will demystify the concept of parametrics and deliver solutions to protect assets, lives and livelihoods.”
Philipp Kusche, Global Head of ILS, Howden Tiger added: “Howden is scaling up and enhancing its capabilities to lead the market response to climate change. Our strong presence at the Monte Carlo Rendezvous and New York Climate Week this year symbolises our ability to deliver across the value chain and fulfil the structural demand for more resilience and financial solutions to the greatest challenges created by climate change and the net zero transition. Our collective approach, and our rapidly expanding Climate Risk and Resilience practice, creates a powerhouse of parametric potential that we look forward to deploying to serve our clients and to build this vital market with our carrier partners.”