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The Demex Group, a risk analytics and intelligence company that facilitates climate and catastrophe peril parametric stop-loss reinsurance protection, has announced a $10.25 million funding raise to help it respond to growing demand for its innovative products.
The $10.25 million in funding has been raised through a Series A and previously closed SAFE round, led by Congruent Ventures and included Moxxie Ventures, MetaProp, and existing investor Blue Bear Capital.
Last year, The Demex Group raised $5 million to deliver its severe convective storm (SCS) and other secondary peril focused solution, Retained Climate Risk Reinsurance (RCR Re), to market.
Demex’s core offering is a parametric reinsurance solution for losses caused by severe convective storms, including tornadoes, thunderstorms, hail and wind.
At a time when coverage in the reinsurance market for the SCS peril has reduced and aggregate or sideways reinsurance limit is less available, Demex’s product offering can therefore fill a gap that is evident for many re/insurers.
Working with reinsurance brokers and reinsurance companies, Demex arranges parametric protection for losses above a specified threshold.
The company says this business model is “resonating with customers as well as investors with $65M of reinsurance bound in the first selling season.”
“Growing losses from these storms are a critical problem for the insurance industry – challenging insurance companies’ annual earnings and balance sheet surpluses. We’re grateful to have investors who bring climate perspective, technology capabilities, a property mindset, and insurance experience to Demex,” commented Bill Clark, President and CEO of Demex.
“Insurance carriers are taking significant losses from high frequency events such as thunderstorms and have been digging into their surpluses for years,” added Abe Yokell, Co-Founder and Managing Partner of Congruent Ventures who led the round. “Reinsurers, too, have experienced higher than expected losses due to secondary perils. The Demex model – developed by a blue-chip team from industry heavyweights – quantifies risk and reduces deviation, which broadens reinsurance offerings and ultimately provides a stronger insurance industry for property owners.”
“Higher frequency extreme weather events, like severe convective storms, now cause more damage than the catastrophic events that are addressed by traditional reinsurance,” Hank Hattemer, Chief Operating Officer of Blue Bear Capital also said. “Each Demex insurer customer gets a reinsurance product that is precisely calibrated to how those weather events affect its business, tuned based on its own data. No other reinsurance product that I’m aware of works like this – it is a fundamentally new product and the market response has been overwhelmingly positive.”
Demex models loss accumulation based on weather and claims data, informed by climate research, to derive the parameters for the triggers underpinning it stop-loss reinsurance offering.
The company calls itself a “market-maker for a class of risk that is surpassing catastrophe losses,” adding that the SCS perils threaten “not only insurers’ annual earnings but also the sustainability of their businesses.”
Given the focus for the year-end reinsurance renewals for many insurers will be on negotiating and securing more coverage for the frequency risks they face, Demex’s parametric reinsurance solution could find itself facing continued demand.
Demex raises $10.25m as demand for parametric stop-loss reinsurance solution grows was published by: www.Artemis.bm
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