How a winter storm inspired one CEO to harness the power of parametric insurance

The AI-driven start-up focuses on hard-to-insure risks

How a winter storm inspired one CEO to harness the power of parametric insurance

Catastrophe & Flood

By Gia Snape

Parametric insurance has been around for a few decades, but it’s mainly oriented around weather-related risks.

But what if this non-traditional insurance could cover traditionally challenging risks, such as power interruptions?

It’s a question that Soton Rosanwo (pictured) has set out to answer. When a snowstorm knocked out power in Texas in 2019 and left tens of thousands of residents without electricity, Rosanwo asked why there wasn’t any coverage for such a catastrophic exposure.

“Parametric has always been oriented towards the agricultural sector, but I started to wonder, why can’t we expand this beyond that narrow range of risks?” Rosanwo said.

“I remember listening to the news and hearing that so much damage had occurred and even loss of life, and there was no real recourse because things like power outages are typically not covered by standard personal or commercial lines insurance.

“I told myself this would be a great example of something parametric could help solve.”

“Our relationship with risk is fundamentally changing”

The realization of this coverage gap and the power of parametric structures propelled Rosanwo to found Centinel in 2022.

Before making the leap to entrepreneurship, Rosanwo had worked in various industries, including media, e-commerce, and organizational design.

In her most recent role as an innovation and product strategy manager at Allstate, she began to think about how common risks were increasingly complex to insure.

“One of the first things that hit me is that our relationship with risk is fundamentally changing,” Rosanwo said. “Many of the problems we’re facing are increasingly occurring and hard to insure using the traditional insurance methods.

“I started to wonder, can we leverage our data and increase our access to data to make those hard-to-control risks coverable? That’s where the idea for what we could do with parametric came to the forefront.”

Centinel is aimed at providing coverage for infectious diseases, interrupted utilities, climate change, and event cancelation using a parametric approach.

Using an AI-powered tool, the insurtech aims to offer personalized coverage terms in clear, easy-to-understand language for insurers.

Rosanwo talked about what gave her the confidence to start Centinel.

“In the summer of 2020, I commissioned a study with 400 participants because I needed to know the answer to two questions: one, is there a demand for coverage for hard-to-insure risks, and two, is it economically viable to provide such coverage leveraging the parametric approach?” she said. “The answer came back ‘yes’ to both questions.”

One of Centinel’s biggest selling points is claims-free coverage. Because it doesn’t focus on the level of damage or loss, it pays out automatically based on whether the parameters that define the risk have occurred.

“In the case of power outages, anyone can come to us and say, ‘If we experienced a power outage that lasts for three days or more, I want to pay out of $2,000,’” Rosanwo said.

“We can monitor for that risk event in real time. Should we detect it, we will alert you and automatically send you that $2,000 we agree to without you having to file a claim.”

Founding an insurtech at the cusp of an AI explosion

Rosanwo had always known artificial intelligence (AI) and machine learning were vital to the parametric insurance formula that would make up Centinel.

She hadn’t known how quickly AI would explode in the next few years.

“I started drafting the filing for Centinel’s provisional patent in early 2020. We’re thinking through what the IP would look like, and AI was naturally embedded into it,” she said.

“Fast forward to today, and AI’s a huge topic everywhere. But to me, it wasn’t about trying to latch on to a particular trend; it was just that it is a way to more efficiently, effectively provide coverage.”

Amid rapid AI adoption in the insurance industry, Rosanwo stressed the importance of protecting user data.

“One of the important things to me, as I was dreaming of Centinel, was to ensure that we never have to take more data about the policyholders than we have to,” she said.

“Leveraging AI, machine learning, and predictive analytics can help us do that.”

What are your thoughts on Centinel and its parametric insurance approach to hard-to-insure risks? Tell us in the comments.

Related Stories

Keep up with the latest news and events

Join our mailing list, it’s free!