FloodFlash is perfect for supporting clients in with hard to place classes of business. Our sensor-based parametric insurance pays out based on the depth of flooding at the client’s selected location. That means that any class of business can benefit. To demonstrate, here’s a real FloodFlash case study from an agricultural processing business in California.
Hard to place risk – the overview
- Location: Sacramento California
- Sector: Agriculture, Food Production & Processing
- FloodFlash requirement: business interruption coverage, high value machinery coverage
The business behind the need for flood coverage
This business runs a rice processing facility alongside the Sutter by-pass canal near Sacramento, CA. Operations include drying and storage of crops ready for shipping for further processing. Property and contents at the riverside site range from the vast silos to the complex conveyor systems and vital drying motors. The complexity of the site and insurance requirements meant that options on the traditional market were almost non-existent. This was a sign to the broker that parametric risk transfer might be a better option.
The flood insurance situation
The broker manage to secure a property and casualty policy that covered the contents in the event of the flood. However there was no coverage available for business interruption. With a wet year in California leading to high rice yields, any interruption to the facility would have huge implications. Flooding would cause large BI losses and a significant impact on the onward supply chain.
The FloodFlash parametric flood solution
After discussing what the impact of a flood might be on the facility, the business and their broker reached out to FloodFlash to review options for the business interruption coverage. Having worked on a multi-trigger policy to cover minor, moderate and severe outages – they landed on a premium that was within budget.
The parametric structure:
- Trigger 1: $250k at 12in
- Trigger 2: $1.5m at 24in
- Trigger 3: $2.75m at 36in
- Total coverage: $4.5m
The business will suffer severe business interruption if the machinery supporting the facility is compromised by a flood. That’s why even though the FloodFlash policy wasn’t used to cover the machinery, the height of the machines were used to set trigger depths. Despite the complexity of the insurance needs and the hard to place class of business, FloodFlash and the broker were able to design a simple policy that will help the business weather any floods that come their way.
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