Let us say you run a ski resort. Clearly, your economic well-being depends on how much snow falls in a given season since otherwise, you’ll need to use snow-making machines, skiers may not arrive, etc. You might be interested in an offering along the lines of “You pay $10,000. If the region gets less than 3 inches of snowfall, you’re paid $1 million”.
WHAT ARE PARAMETRICS?
Parametrics offer a way to address risk that is simpler than regular insurance.
The general statement of a parametric offering is
``If you pay me X and if bad thing Y happens, then I will pay you Z.``
Y is viewable/measurable by all parties.
Thus there is no argument about whether Y did or did not occur.
Z is determined in advance
Hence, there is no claim process to determine your loss.
The price and payout of a parametric may be fixed, or the buyer may select them via an online slider.
Parametrics may be offered per event or per month or per quarter etc., not just annually.
Parametrics may be billed via credit card and may auto-renew.
EXAMPLES
If an earthquake of intensity more than X strikes within Y miles of your house, we will pay you $Z.
If the ship holding your container fails to dock/unload within N hours, we will pay you $X
If your website home page fails or your e-commerce confirmation page fails or your SLA is in breach, we will pay you $X.
If your flight is delayed by more than N hours, we will pay for your ticket.
If sensors embedded in your wind turbines indicate impending failure past some threshold, we will pay you $X.
If you get a notice-of-audit with respect to some regulation, we will pay you $X.
If the train takes more than N minutes to arrive during your morning commute, we will pay you $X.
If a sensor in your automobile indicates impending failure, we will pay you $X
TECHNOLOGY
In order to provide any parametrics, it is necessary to have two pieces of technology. They are:
SCAN
The technology to scan (if needed) any set of IP-addressable devices (websites, servers, IoT sensors…) in push as well as pull mode, combination of the gathered data with other databases and analysis of the results via the appropriate machine-learning algorithm.
This serves two purposes:
- Estimating the probability of out-of-band behavior and hence the price structure of the relevant parametric.
- Determining whether/when a given parametric offering has actually triggered.
PLATFORM
A platform to enable the selling and servicing of any parametric offering. There are many sales+service scenarios, including but not limited to:
- Insurance carriers and MGAs selling parametrics as ‘bolt-ons’ to base insurance offerings
- Insurance brokers selling parametrics as part of larger multi-risk packages
- Non-insurance companies selling parametrics as ‘warranties’ atop what they sell anyway.
Machine Cover's entire technology stack is accessible via secure, access-controlled ReST APIs. This allows our partners to integrate the Machine Cover offerings directly into their websites and mobile apps.
KEY MILESTONES
Machine Cover has
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Signed an agreement to receive data weekly, at roughly 400 x 400 yard resolution, for the US and UK, and the right to obtain the same data for other countries worldwide.
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Used this data to build an insurance model that lets all parties detect sudden changes in economic activity at a very fine-grained level.
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Got this model actuarially ‘approved’ by Milliman.
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Obtained US patents on the concepts underlying the model, running through 2043.
Machine Cover has created three product families, along with several products derived from them. Our partners are welcome to sell what we’ve created or to build new products. The product families are aimed at:
The public-entity market
The small- and medium-enterprise market
The large-enterprise market
ABOUT
Machine Cover, Inc. is a San Francisco-based company.
We jointly explore parametric offerings with our clients.
We use artificial intelligence to analyze
vast amounts of data pertinent to parametrics.
We help our clients establish the price structure for
any parametric they offer.
We provide our clients with all the tools and support
they need to sell and service parametric offerings.
KEY BACKERS
MICHAEL MARCON
Founder/CEO of Symphony
Risk, a prominent insurance
brokerage. Former founder &
CEO of Equity Risk Partners, a
leading insurance broker
focused on PE portfolio
companies
PETER DURHAGER
Chairman, Ascendant Group &
previously President at
Renaissance Reinsurance
Services
DR. JACQUES RICHIER
Chairman & former CEO of
Allianz France (the former
Assurances Generales de France,
the national French insurance
company) & Chairman of Allianz
Worldwide Partners
JEFF HAYMAN
Former Board of Directors at the
Zurich Insurance Group.
Previously CEO, Global Consumer
Insurance at AIG & President of
International Operations at the
Starr Companies
GARRETT KOEHN
Former President of the
Brokerage Division of CRC
Insurance, a leading US insurance
wholesaler
BETH HIRSCHHORN
Former Chief Marketing
Officer at MetLife
KISHORE PONNAVOLU
Former CEO of MetLife Asia
DENNIS CHOOKASZIAN
Former Chairman & CEO of CNA
Insurance. Serves on the Board of
the Chicago Mercantile Exchange
FOUNDER
INDER-JEET GUJRAL
He has supervised or been involved with operations, technology, and product development at WebMD, which was recently sold for $2.8 billion. He has founded and run several companies and before that he worked as a consultant at Bain & Co., mainly involved in M&A activity.
He holds an MBA from Stanford University. He also holds degrees in Solid State Physics from the Indian Institute of Technology, New Delhi and an MS in Computer Science/Mathematics from the Rensselaer Polytechnic Institute in Troy, NY. He has done graduate work in Byzantine & Ottoman History at Harvard & is a licensed helicopter pilot.
Machine Cover