October 02, 2021

InsurTech and Climate Resilience

InsurTech Connect 2021

Ed Byrns, CEO

I was recently in Las Vegas at the NPA Convention and Expo speaking with the nation’s top parking executives about creating budget certainty for snow and ice removal. Now, I’m back in Vegas for the InsurTech Connect 2021. I’m proud to join leaders from across the InsurTech industry, including our partners from Munich RE and Anthemis.  

Major weather catastrophes (leading to over $25 Billion in losses) have increased four-fold since 1980.

Smaller scaler weather catastrophes (under $25 Billion in losses) have also increased. The number of these events in 2020-2021 already outpaces the entire decade of the 1980s.

There is often an insurance coverage-gap between these smaller-scale events and major events and this gap has widened dramatically over the past few decades.

Climate change is driving our weather to become more extreme.

Everyone under 40 today will live “an unprecedented life in terms of their lifetime exposure to heat waves, droughts and floods,” and the children born in 2021 will live through an average of seven times the heat waves, twice the wildfires, and three times the droughts, crop failures, and river floods as their grandparents’ generation.  

InsurTech is addressing climate change by creating financial resiliency. Property owners, occupants, and managers can recover from cost overruns and revenue shortfalls that are linked to the “Kits” that occur almost every year.

“The flooding in Philadelphia, Pennsylvania, from Hurricane Ida’s remnants, seen here on Wednesday, September 2, shut down a major highway in the city.” – Charles Davis/Insider

AXA reports global warming was rated the single biggest issue facing society in 2021, 2019, and 2018. But traditional insurance and reinsurance don’t account for the expanding gap between the “cats” and the “kits.”  Uninsured costs are increasing thanks to the increase in extreme weather. These losses fall below traditional coverage thresholds and within deductibles. 

The housing industry faces monumental risks from extreme climate events. A September report from the Mortgage Bankers Association’s Research Institute for Housing America, however, shows that firms in housing and housing finance are unable to meet risk standards to even quantify climate risk.

The current climate-focused insurance options are limited. They typically cover only major-catastrophes or consolidated risks in energy and agriculture. Innovation requires a new understanding of climate risk as a global problem with unique local exposures. FEMA’s new flood insurance risk rating, built in 2019, incorporates this science: instead of pricing based on broad 100-year flood plains, prices insurance based on the risks to each individual property.

The future of climate resilience is localized to the property level.

I assembled the Demex to address this climate risk gap. We are the future of InsurTech building data, analytics, and risk transfer capabilities to deliver climate resilience to every individual property around the world. After incubating for nearly a decade at MunichRe, we launched our vision to address the challenges the insurance and re-insurance industries face due to the rapid advance of climate change. The Demex Group spun out from MunichRe at the turn of 2020. We estimate there is currently $335 billion in total global climate risk. Demex is delivering climate resilience in this market.

The bottom line: The need for all businesses to navigate the weather going forward is as undeniable as climate change itself — and they’ll pay for the best tools money can buy.  — Axios


Property-level climate resilience includes coverage for the risks to operational costs and expenses from extreme weather of all kinds. Climate resilience also requires customization for each case, available for all locations and in currently overlooked markets. Demex products cover any weather exposure of any property that affects operational cash flow. For example, we help property managers prepare for the expenses of snowy winters, and homeowners address unexpected costs that arise during extremely cold winters.

Our platform is a first-of-its-kind, end-to-end solution for analyzing, pricing, and transferring climate risk. We can solve unique, complex climate problems at scale, and we’re always expanding our capabilities.

We’re part of a growing $200 million extreme climate resiliency InsurTech market driven by investors passionate about finding solutions to the climate crisis.AnthemisIA Capital GroupBlue Bear Capital, and QBE have all invested in our mutual commitment to supporting innovation in response to climate change.

Anthemis investor Ruth Foxe Blader understands the scope of climate risk: 

It’s no secret that climate change is impacting risk. Insurers are abundantly conscious of the increasing numbers and severity of natural catastrophes, particularly on coastal property portfolios. But nearly all businesses are impacted by the weather. Even non-catastrophic climate variability can significantly impact a business’s balance sheet.

Andrew Lerner of IA Capital addressed the relationship between InsurTech, FinTech, and climate change: 

[While] I am confident the fintech revolution (including our portfolio companies) has made the world a better place, the climate change crisis has become more urgent. … Climate risks present an unprecedented opportunity for insurtech startups. … As the world’s most active insurtech investor excluding accelerators, IA Capital is constantly seeking to invest in startups developing new ways to manage previously uninsurable risks. 

QBE takes an active approach to climate change:  

As an international insurer and reinsurer, we see first‑hand the impacts of climate change on our customers and communities. Climate change presents a material risk for our customers and our business, but it’s also driving innovation and new opportunities. … Climate change is likely to increase the risk of extreme weather events and we can respond through our role as risk managers, underwriters and investors.