Event-based insurance has many advantages over traditional indemnity cover. We have shown the potential of this new insurance product to offer faster payouts, fairer prices and more flexible cover. Business owners and landlords across Britain are already learning the benefits that come with a FloodFlash policy. However, there is one key question that often arises when customers are introduced to the concept: “what happens if I miss my trigger event by a small amount?”
We never want to leave a business with inadequate cover. So to combat this particular shortcoming of parametric insurance, we have introduced policies with multiple trigger points. Now businesses have access to cover that has multiple trigger depths, so a flood of 0.48m could have triggered smaller payouts at 0.2, 0.3 and 0.4m — meaning there is less concern that the 0.5m trigger depth did not lead to a payout.
Creating policies with multiple trigger points may seem like more effort when a customer could choose cover at a lower trigger level. However, there are many benefits that make that extra effort worthwhile:
To demonstrate how multi-trigger policies are cheaper, let’s take a look at an example.
Miss Smith operates an independent retailer whose main flood concerns are clean-up, stock replacement, and paying wages for when the shop is out of action. Her shop flooded previously to a depth of around 1.0m, requiring a payout of £100,000.
When choosing her cover, Miss Smith has two key thoughts:
With a single-trigger policy, she would select a payout amount of £100,000 at 0.2m. This would ensure that she has the same level of cover, and that a payout occurs for a lower level flood. However, this leads to a large premium.
There is a better option. Miss Smith talks to her broker, and they agree to design a multi-trigger quote. Given her requirements, Miss Smith requests the following trigger depths and payout amounts:
This quote still has the maximum payout of £100,000 if a 1.0m flood were to happen, but she receives small amounts of the total at different depths. If we share the payouts across different depths of flooding the cover becomes much more efficient. By removing unnecessary payouts that aren’t required for low level flooding and adding them to higher trigger depths we can offer Miss Smith a much more competitive price — and she still has the cover her business needs when larger floods happen.
This may seem like an obvious point, but the flexibility of multi-trigger policies is important for businesses that want bespoke cover. FloodFlash customers can now choose up to five different trigger depths, each with a corresponding payout amount. No two businesses are identical, so it stands to reason that our insurance policies are tailored to each and every business we cover.
Finally, and going back to the limitations of parametric insurance, multi-trigger policies mean that there is a lower fear of missing out on a payment. Knowing that you have multiple payout options and that regardless of the final flood levels, a payout is available for lower to medium flooding helps ensure that businesses are prepared to recover from every scale of flood event.
Multi-trigger quotes now come as standard for any FloodFlash customer. If you want to find out more about FloodFlash rapid-payout insurance or you want to apply for cover for your business or commercial property email firstname.lastname@example.org, or refer your broker.