Lloyd's is piloting a new 'first-of-its-kind' business interruption (BI) policy for small-and-medium-sized enterprises (SMEs), specifically designed to protect them against IT disruption or downtime.
The new product is led by Tokio Marine Kiln and supported by other members of Lloyd’s Product Innovation Facility including Renaissance Re. According to Lloyd’s it is the first off-the-shelf parametric IT downtime policy tailored towards SMEs.”
Called ‘Parametrix Insurance’, the new policy offers simple and reliable coverage by removing the traditional indemnity trigger that most insurance policies today use. Instead, the new solution uses a parametric trigger, meaning that the policy automatically pays out if a customer’s critical IT services – such as cloud, e-commerce or payment systems – are disrupted.
A statement by Lloyd’s said that this will significantly reduce the time insurers spend assessing a loss or adjusting a claim.
A Lloyd’s representative said the product is currently in a proof of concept phase, offered to SMEs in Israel. “It’s a controlled experiment which we hope goes well, and we can then scale once we understand it more.”
Tel Aviv-based Parametrix Insurance co-founder and CEO Yonatan Hatzor said, “Businesses have shifted to managing most of their critical IT operations by using third-party service providers, thereby increasing their vulnerability to disruption.”
“As a result, critical technology downtime has become the fastest growing risk for businesses today, whether you are a technology company or not. On top of this, the existing claims process in the field is complicated, expensive and time consuming,” Mr Hatzor said.
“Parametrix’s approach addresses all these issues, providing a solution that saves both time and money, while making technical insurance accessible to new business segments. We are thrilled to launch the first ‘off-the-shelf’ parametric insurance product for IT downtime,” he said.
Lloyd’s head of innovation Trevor Maynard said, “We know that insurance products and services have to evolve to respond to the challenges of the COVID-19 pandemic and help our customers cover new or heightened risks that they may encounter now or in the future.”