Augment Risk partners up for parametric risk transfer market

Collaboration set to benefit a diverse client base

Augment Risk partners up for parametric risk transfer market


By Kenneth Araullo

Moody’s RMS has announced a partnership with reinsurance broker Augment Risk to enhance the development of the parametric risk transfer market.

Together, they aim to address the growing need for innovative risk management solutions amid the increasing impact of extreme weather events, climate change, and natural catastrophes on communities worldwide.

The partnership is set to benefit a diverse client base, including large corporations with captive insurance, Lloyd’s of London syndicates, and insurance-linked securities (ILS) funds.

During these unprecedented times, various entities are known to be exploring parametric reinsurance solutions for their potential to mitigate risks associated with a variety of perils, such as windstorms, earthquakes, wildfires, and severe convective storms.

The collaboration hopes to facilitate the creation of well-structured, consistent risk transfer submissions to the market, enabling syndication among various capital sources.

A growing need for parametric products

Ben Brookes, managing director at Moody’s RMS, emphasized the growing importance of parametric risk transfer products in the industry.

“Parametric risk transfer offers the combined benefits of high transparency and complete risk disclosure, plus the prospect of rapid loss settlement. We look forward to continuing to open up significant market growth by increasing the use of sophisticated risk models and basis risk analytics as enablers,” Brookes said.

Kurt Cripps, global head of parametric at Augment Risk, also discussed the benefits of partnering with Moody’s RMS, particularly the access it provides to cutting-edge risk analytics capabilities.

“Furthermore, demonstrating how the product responds to certain perils is key for achieving solvency benefits for carriers. As this embryonic market establishes itself it is evident that buyers and sellers will require absolute transparency on the index and the actual and projected losses for a given risk,” he said.

“Risk is more extensive and complex than ever before, and this collaboration will allow our partners to make more informed, accurate, efficient, and confident risk management decisions, armed with the latest models that the markets use to assist in pricing parametric risk. By keeping clients fully informed, we can achieve more consistent prices and help normalize this exciting market.”

Meanwhile, Andrew Matson, CEO of Augment Risk, shared his perspective on the strategic alliance and its importance to the market.

“For us, this collaboration is an important development as investors seek more accurate and specific modeled outputs,” Matson said. “As one of only a few specialist brokers in this space, Augment Risk is delighted to have parametric solutions as a cornerstone of our execution strategy and this collaboration is further recognition of our absolute determination to build a differentiated and relevant reinsurance broker.”

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