Insurtech start-up FloodFlash has raised £1.9 million of seed funding to accelerate the nationwide roll-out of its service.
LocalGlobe, Pentech Ventures and InsurTech Gateway provided the funding, as FloodFlash, which offers a new way for customers to insure previously uninsurable flood risk, carried out a live pilot for its policies with a select group of small- and medium-sized enterprises (SMEs) in parts of the UK.
A FloodFlash policy pays out a pre-agreed, fixed sum as soon as a pre-defined level of flooding occurs. The flood triggers an internet-connected water-sensor and the payment is made immediately to the policyholder.
Its founders, Adam Rimmer and Ian Bartholomew, who previously modelled and structured parametric catastrophe bonds for large corporations and governments, wanted to make these kind of insurance products available to SMEs.
Rimmer explained: “Every year tens of thousands of business owners lose their livelihoods because they have been unable to take out an affordable policy that protects their business. In the immediate aftermath of a catastrophic flood, people care less about dollar-for-dollar reimbursement for damages and more about whether their business will survive at all. We want to make the world more resilient to catastrophic events and we believe FloodFlash’s event-based insurance is absolutely the best way for insurers to cover higher-risk areas.”
Bartholomew added: “The efficiencies in the technology that we have developed make FloodFlash policies available to those who need it most. The FloodFlash sensor and high-resolution pricing algorithms are essential parts of that. We think that by pricing risk in this way, and by promising instant settlement, we can help to resolve what is arguably the largest market failure in insurance.”
Insurance capacity for FloodFlash policies is provided by Everest Re through its syndicate at Lloyd’s of London. The company is becoming a coverholder at Lloyd’s, giving it the ability to underwrite and issue a larger number of policies.
FloodFlash has been working as part of the InsurTech Gateway, the insurtech-focused incubator, since 2017. The start-up currently employs five people but expects to double that number over the next six months, as it prepares for product launch in October. The team already includes published scientists, expert insurance software engineers and a former Dyson product designer.
Stephen Brittain, co-founder and director of InsurTech Gateway, commented: “FloodFlash has designed a product that will revolutionise the sale of flood insurance in this country and around the world. We are delighted to have had the opportunity to fast-track the company through the early stages of concept definition and funding rounds to ready it for scaling.”
Tara Reeves, partner at LocalGlobe, added: “Climate change is leading to more extreme weather events, but these are often hard to insure. Parametric insurance dramatically reduces underwriting and loss adjustment costs, and those savings can be passed on to the consumer. Adam and Ian’s background in risk modelling and hydrology is uniquely suited to this challenge.”