Calm after the storm

This parametric tornado disaster benefit insurance serves as a lifeline for those facing the upheaval caused by tornadoes, embodying the true spirit of resilience and recovery.

Exploring the problem

We are seeing changes in the pattern of tornado activity across the Mid-West and South Eastern United States – with more intense days of activity and tornados happening at unexpected times of the year1.

Faced with this growing threat, homeowners need a new solution that bridges the gap between their immediate, emergency needs in the aftermath of a tornado and the full settlement of their property insurance claim.

Creating a solution

Beazley partnered with Sola Technologies and Spinnaker Insurance Company to address this widening natural disaster coverage gap and provide the first admitted parametric2 tornado disaster benefit insurance for homeowners.

The policy, issued by Spinnaker with full reinsurance backing from Beazley-managed syndicates at Lloyd's, offers limits of up to US$15,000, an amount carefully chosen to cover typical deductibles and immediate expenses that arise in the wake of a tornado.

This rapidly available financial relief is assessed based on a precise and transparent mechanism that measures the path and severity of a tornado on the Enhanced Fujita (EF) scale and is defined by the National Weather Service (NWS). Once the EF scale classification is determined, it activates the policy's payment process.

This parametric approach ensures that there is no ambiguity in the payout process, providing policyholders with certainty and speed - two critical factors during a disaster.

The solution is the first fully scaled tornado parametric product and is available in 15 US states across the Midwest and Southeast - regions that are all too familiar with the destructive power of tornadoes.

Building resilience

Today the product has 3,500 policyholders and proved its value just four months post launch when it paid out a claim in just 60 hours to two families struck by an EF2 tornado. These quick payments kickstarted their recovery process, eased their anxieties and showcased the social necessity of innovative insurance partners.

This is a significant departure from the often protracted timelines associated with traditional insurance policies, where assessments, claims processing, and other procedural steps can delay the much-needed funds for recovery.

The product is a testament to the insurance industry's evolving landscape, where traditional policies are being complemented by more agile and responsive solutions. The intention is to expand availability, bringing this much-needed financial safety net to more states in the near future.

But don’t just take our word for it, these are the thoughts of some of the independent insurance agents that offer this product direct to clients:

“This gives much needed options to those with high deductibles” – TnT Insurance Group

"This is so cool. The way you can see where the damage is. It’s all so clear… You are bringing a sledgehammer to my toolbox.” - Entriken Insurance