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Marsh introduces index-based insurance solution for earthquake and windstorm risks

IBR Staff Writer Published 08 June 2011

Marsh, an insurance broker and risk advisor, has expanded the index-based insurance solution for organizations with significant earthquake and/or windstorm exposures in the US and Europe, to protect their assets.

The solution, County Weighted Industry Loss (CWIL), is now available to Marsh's corporate clients with exposures in the United States and Europe.

CWIL was originally developed in 2010 by Guy Carpenter & Company, as an index-based reinsurance contract issued by Bermuda-based hedge fund Nephila Capital.

According to the Marsh, unlike other index-based insurance instruments that use total industry or state-wide loss figures to calculate loss payments, CWIL uses loss data calculated from Property Claims Services broken down to a county level.

This enables companies to hedge their earthquake and windstorm risks at a more granular level allowing for a better match with their actual losses.

Marsh's Financial Risk Products Practice global head Quentin Hills said earthquake and windstorm insurance coverage has traditionally been difficult and expensive to obtain for organizations with significant exposures, and that is only being exacerbated in today's transitioning property catastrophe market.

"Working with Nephila and Guy Carpenter, Marsh has adapted the CWIL index-based solution to provide clients with access to dedicated capital that previously had only been available to insurers and reinsurers," Hills said.