Willis, a business of insurance and reinsurance broker WTW, has launched a new sensor-based parametric insurance solution designed to protect UK racecourses against localised flooding.
The launch of this sensor-based parametric solution comes as flood risk continues to rise across the UK, with related costs on track to rise by up to 50% and hit £3.6 billion by 2050.
Racecourses, which are typically located on low-flying floodplains are especially vulnerable to flood-related property damage, requiring costly clean-up, repairs and refurbishment, as well as financial losses from business interruption.
As a result, insurers often exclude flood cover for certain locations or impose very large deductibles.
Royal Windsor Racecourse, one of 16 UK racecourses owned and operated by the policyholder Arena Racing Company (ARC), is the first of its locations to implement a sensor-based parametric flood policy.
Much like other ARC racecourses, including Worcester and Southwell, Windsor Racecourse is highly exposed to flooding due to its location directly on the River Thames and has previously been considered uninsurable for flood risk.
Claire Wilkinson, Managing Director, Alternative Risk Transfer Solutions, Willis, commented: “Traditional insurance often struggles to provide affordable flood cover in high-risk areas leading to high premiums, large excesses or complete exclusions for flood. In contrast, parametric solutions offer an alternative approach, tailored to the specific needs of the client.
“Claims are paid automatically and promptly when a measurable flood depth trigger is met, regardless of actual damage. These solutions respond quickly and objectively, offering complete flexibility in the use of the claim proceeds.”
According to Willis, the parametric solution involves installing a flood sensor, provided by Previsico, at a location on the insured property selected by ARC to reflect its precise exposure and requirements.
The policy is designed so that when the sensor detects water levels reaching the selected trigger depth, ARC will automatically receive a payout. This payout scales according to the maximum water depth, up to the agreed policy limit.
As a result, this allows claims to be paid quickly with no protracted loss adjustment process.
Furthermore, an additional benefit of the sensor approach is the continuous monitoring of water levels, which provides early warning of potential flooding, enabling clients to manage the impact by implementing flood risk management protocols, which includes moving sensitive equipment to higher ground.
As well as this, the solution can also be replicated across all flood-exposed locations and tailored to the specific circumstances of each racecourse, which will ultimately provide ARC with coverage for an otherwise uninsurable risk.
Kieran Gallagher, Group Operations Director at ARC, said: “We are grateful to the team at Willis for offering this new insurance solution, which will be of real benefit to Royal Windsor Racecourse. The business has previously not been able to insure against flooding, so this new approach, combined with the ongoing monitoring of river levels by Previsico, will be hugely important.”
Hamid Khandahari, Data Scientist and Parametric Underwriter at Descartes Underwriting, also explained that by developing a deep understanding of the site-specific flood exposure, incorporating historical flood data as well as the impact of river defences and relief channels, they were able to support a tailored parametric insurance solution where traditional coverage options were unavailable.
