There were 24 confirmed weather or climate disaster events with losses exceeding $1 billion each in the United States this year. (Credit: Timothy/Adobe Stock)
As 2024 comes to a close, many are still taking stock of the damage left from disastrous hail storms, flash floods, hurricanes, tornadoes, wildfires and other weather events.
According to the National Centers for Environmental Information, as of November 1, there were 24 confirmed weather or climate disaster events with losses exceeding $1 billion each this year. Between 1980 and 2023, the annual average of these events was just 8.5. In the last five years (2019 to 2023), the United States has seen that average rise to 20.4.
Enter Ric, a new parametric insurance startup. Launching in 2025, the company plans to offer products ranging from $14 to $50 per month. Meant as a supplement to traditional insurance, Ric would provide automatic payments of $10,000 and up when a policy is triggered by an event such as flooding, high winds, wildfire and other natural disasters.
The automatic payout could be used for anything from repairing damage caused by the event to replacing lost wages.
“We know that, in the United States, especially from a property and catastrophe standpoint, we’re under insured,” said Nakita Devlin, Ric’s CEO. “Parametric insurance is really well-positioned to provide at least a portion of the solution.”
Devlin is working to partner with communities and large employers to offer Ric products as an employee benefit. “With the existing distribution lines in the catastrophe space, it becomes really tricky to sell a micro policy,” she said. “We’re trying to leverage the group distribution model, and we think this product is a win-win for employees and the employer.”
Weather disasters can result in business closures, absenteeism and other issues for employers. A recent study by the International Chamber of Commerce found extreme weather events have cost the global economy more than $2 trillion over the last 10 years.
Devlin hopes, by offering parametric products through employers, employees will better understand their potential coverage gaps. “If your employer thinks you’re at risk, then maybe you’re more likely to think you’re at risk,” she said.
Interest in parametric solutions is rising. This fall, the Mississippi River Cities and Towns Initiative (MRCTI), which represents 105 cities in 10 states along the Mississippi River Basin, announced it’s working with Munich Re to pilot a parametric insurance product.
Flooding along the basin has resulted in costly damage in recent years, not all of which has been covered—or covered promptly—by traditional insurance. The pilot will mock up a system in which watershed data will be used to trigger automatic payouts in the event of a flood. The rapid payouts would help cities recover more quickly, without the time and hassle of documenting damages.
So far, however, it’s unclear how the system would pay for itself. Individual cities would ultimately hold the policies and receive the payouts, and some officials are hoping corporations along the river would pay for the premiums.
While Ric will initially offer its products on the East and West coasts, it plans to serve inland, riverine communities eventually as well. “The demand for these products really exists inland too,” Devlin said. “It’s a very unique time to be a parametric startup because we have the flexibility to work with any states to fit their needs.”
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