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Business Observer Friday, Jun. 22, 2018 1 month ago

Upstart insurance firm from California targets growth in Florida

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Florida’s storm insurance sector, not always aligned with its customers, has a new entry.
by: Mark Gordon Managing Editor

An upstart insurance company as far away from Florida as California aims to deliver something exceedingly rare for hurricane-weary and flood-prone Sunshine State customers: happiness.

The company, Pleasanton, Calif.-based Assured Risk Cover — founded by catastrophe risk professionals and backed by a Silicon Valley venture capital firm — sells parametric insurance under the brand name StormPeace.

Parametric insurance covers supplemental losses from a storm or event — but only after predetermined parameters of the event, such as a certain wind speed, occur. In parametric insurance, payment is also agreed to before the event, so there’s no lengthy and arduous claims adjustment process. (Parametric policyholders must prove the loss after receiving payment. In most cases a sworn personal statement is accepted.)

StormPeace customers, says Assured Risk Cover CEO Alok Jha, get payment almost instantly, with values based on the strength of a hurricane and the distance from your property. “Last year after Hurricane Irma, Assured Risk Cover paid 100% of eligible claims,” says Jha, “and 98% of these claims were paid within three business days, most within one business day.”

Pleasanton, Calif.-based Assured Risk Cover CEO and co-founder Alok Jha.

Clients used money from those claims, adds Jha, to fill gaps in homeowners insurance polices, from damaged pool cages to replacing spoiled food to hotel rooms and meals. The money can also be used for tree and debris removal and power restoration, and even a policy’s hurricane deductible. Homeowners can buy StormPeace to equal their hurricane deductible up to $60,000. (As a surplus lines product, StormPeace isn't licensed by the Florida Office of Insurance Regulation, but the OIR has no objection to the product, according to ARC officials.) 

 “Our mission,” Jha says, “is to get financial relief to our policyholders in a quick period of time.”

The  crucial, challenge for ARC is to go from niche and best-kept-secret type of service to mainstream in Florida, where its operations are run out of an office in Clearwater. “No one else is doing anything like this,” ARC spokesman John Novaria says, save for a few companies in California that focus on parametric insurance for earthquakes. But that scarcity, he adds, makes it a “challenge to get traction” in the marketplace.

The company recently took two big steps to gain traction. One, it made an industry splash in early June when it named former Florida Insurance Commissioner Kevin McCarty to its board of advisers. McCarty was Florida’s first appointed Insurance Commissioner from 2003 to 2016, and was also president of the National Association of Insurance Commissioners in 2012. “I have always firmly believed parametric insurance could be a practical tool to enhance resiliency in society and accelerate the recovery of individual victims,” McCarty says in a statement.

The other big marketing move came earlier in 2018, when ARC signed an agreement with the Florida Association of Insurance Agents for that organization to promote, quote and bind StormPeace policies.

‘Our mission is to get financial relief to our policyholders in a quick period of time.’ Alok Jha, Assured Risk Cover

ARC also relies on people like Jennifer Peeples — first a happy customer, and now a happy StormPeace sales agent. Peeples, with The Peeples Insurance Agency in Sarasota, tried out StormPeace last year, paying $300 for up to $5,000 in coverage. It worked. Two days after Hurricane Irma she had $750 in her checking account.

Peeples used the money to repair broken fence boards and blown out screens. Now all nine employees at the firm have StormPeace, and 1 in 4 customers have added it. “It’s fantastic,” Peeples says. “We offer it to all our clients.”

Jha, meanwhile, comes to parametric insurance from a background studying risk and reliability analytics, with a doctorate in civil engineering from Stanford. He founded the company in 2014, backed by Inventus Capital Partners Managing Director Kanwal Rekhi, who has helped finance more than 50 early-stage technology companies. Rekh is on ARC’s board, along with Jha and Kevin Schrage, who developed and oversaw internet and management software for industry giant Aon, among other roles.

In addition to a marketing push, Jha and his team have the advantage, potentially, of inversely good timing in that Hurricane Irma, for many Floridians, was a serious wake-up call. “Florida is a big market for us,” Jha says. “The first few hours and days after a hurricane can be paralyzing, and that’s why it’s important for residents to take some important financial preparedness steps while the sun is shining.”

(This story was updated to reflect the correct terminology of the Florida Office of Insurance Regulation's handling of StormPeace.) 

 

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