Why FloodFlash chose the smart sensor

It’s an open secret that the FloodFlash sensor is the key to our fast claims and affordable premiums. But why did we choose the sensor for our parametric insurance? Satellites and river gauges fuelled the first wave of parametric flood products. What difference has our (award-winning) sensor made? Let’s dig in and find out.

Get trigger happy

First, let’s take a step back. Parametric insurance pays out when a specific event or condition is met. A good parametric trigger should be several things – easy and objective to measure, simple and cost-effective to interpret, and, most importantly, closely related to the loss incurred. 

Flood depth makes a good parametric trigger for flood insurance - but how do we measure it?
Flood depth is a good proxy for damage, and is widely used by the parametric flood insurance market.

The best proxy for insurance losses after a flood is flood depth. That’s what catastrophe analysts rely on to set expected loss (often using depth-damage curves). Depth was widely used for parametric flood triggers in the catastrophe bonds that inspired FloodFlash because it scales positively with loss.

Once the type of trigger was established, a new challenge emerged: finding the best way to measure depth based on the requirements above.

Tech exploration

When FloodFlash started to explore this question back in 2017, solutions typically fell into one of two categories: satellites, and river or tidal gauges. While these have their benefits, they also come with limitations.

  • Satellites give a snapshot of flooding over a wide area, but compromise on both accuracy and reliability of measurements.
  • River and tidal gauges provide accurate and high-frequency measurements, but can be far away from the insured property, introducing basis risk. 

A third option existed, but had never been made affordable at scale. We began to explore a proprietary sensor.

A new way to protect from floods

We quickly realised that sensors combined the ability of a satellite to provide data about flooding at any location with the accuracy and reliability of river and tidal gauge measurements. After a period of prototyping and testing the FloodFlash sensor was born. 

FloodFlash sensors not only measures water depth, but act as our super-efficient claims department, helping us pay clients fast. Our fastest claim? Just 3 hours and 50 minutes between water reaching the client’s trigger depth and the money landing in their bank account. Here’s how they make the difference:

  • low-cost – sensor rental costs just $200 per year
  • millimeter accurate – we know flooding at insured properties within tiny margins
  • near real-time measurements – we receive data in the time it takes to send an SMS
  • removes basis risk – flooding at the client’s property, reducing basis risk
  • fraud proof – anti-tamper technology built in as standard
  • storm tested – has facilitated frictionless claims for 5 years throughout many major storms
  • back-up measures – claims get paid even if the sensor fails, though none have failed to date 
The FloodFlash sensor
The FloodFlash sensor: our secret weapon that powers our award-winning insurance

‘The sensor is much more than just a depth measurement device, it is a lifeline for business survival’ 

Dr Ian Bartholomew, FloodFlash co-founder and CUO 

Got an at-risk client that would benefit from our smart sensor? Get in touch at getaquote@floodflash.com in the US, or enquiries@floodflash.com in the UK.

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