Flooding is on the rise. Climate change is making our weather patterns more extreme and unpredictable. While rapid urbanisation and population growth are pushing people to live and work in higher risk areas.
Traditional insurance is becoming more expensive and harder to secure for those that need it most.
Every year 80% of the world’s flood damage goes uninsured. That’s a $58bn bill each year for governments, businesses and people. These numbers are growing every year.*
This is a story of two people, who realised they could help small businesses recover from catastrophic flooding. In 2016 they took a calculated risk – today they have brought parametric flood insurance to the mass market for the first time, helping thousands of at-risk businesses secure affordable flood coverage in the process.
When we first met Adam Rimmer and Ian Bartholomew, they introduced themselves as “two guys, 12 slides and a great idea.” But they were much more than that. Ian had hiked across glaciers collecting data to investigate the consequences of climate change. Adam had structured over $1bn in insurance linked securities and was obsessed with how to apply those same principles to benefit a wider audience. They were personally and academically experienced, with a decent amount of daring in them.
“Before FloodFlash, Adam and I worked together modelling multi-million dollar catastrophe bonds for governments and large corporations. It’s a fascinating space where financial instruments that support whole economies intersect with the data modelling for which we both shared a passion.”Ian, Co-founder & CUO at FloodFlash
Adam told us how his parents were unable to get flood insurance where they were living, but also how governments and large companies actually could get the flood cover they needed using an innovative new type of policy – one built with set triggers and set payouts. They understood statistical flood modelling and identified a gap in the market for a product that was accessible to the most vulnerable, regardless of budget.
Pre-seed investing is all about believing in the founders and we believed in Adam and Ian. We wrote their first cheque and FloodFlash was born.
“FloodFlash came into being at Ian’s kitchen table. We knew it would work, so when Insurtech Gateway agreed it didn’t feel like a big risk. It was more like building momentum and taking decisions to capitalise on that early momentum.”Adam, Co-founder & CEO at FloodFlash
FloodFlash has changed flood insurance. By basing settlements on water depth rather than cost of damage, they can eliminate the main reasons that cause insurers to refuse to cover those in the highest risk areas. Even better, by giving their customers the insights into how that price is calculated, FloodFlash makes it possible for policyholders to reduce their premiums by taking mitigating steps, such as lifting key equipment up off the ground. It means the company can insure those who fear they are uninsurable, and customers can get insured for less.
In those early days we learnt a lot from them, about flooding certainly, but also about what to look for in founders and ideas.
- Clear milestones
- Rapid execution skills
- A deep understanding of technology and risk (in this case parametrics and flood risk)
When speaking to Naoki Kamimaeda, Partner at Global Brain about FloodFlash recently he said: “The difficulty in estimating the damage caused by catastrophic disasters means that current insurance options are ineffective, unaffordable or full of uncertainty. FloodFlash has developed a unique parametric insurance product that serves the insurance needs of those most at risk. The FloodFlash approach is not only applicable in Europe and US but will be equally effective in Japan and Asia.”
The Red Tape
Like any insurtech FloodFlash had to carefully navigate regulated territory. Adam reflected positively on his experience developing their product in the FCA sandbox. “The FCA sandbox provided a launchpad for the business in the early stage. This was a great way to gain an understanding of how our product worked within the regulatory landscape and how we could best position it to customers.”
The Insurance Partners
Walking into a room of senior underwriters and asking them to insure the very thing that they had been actively avoiding their whole career was a challenging moment. But with each meeting, little by little, Adam and Ian opened minds and eventually turned long set beliefs about flood risk on its head.
“In the early days it was good old-fashioned shoe leather and invaluable support from Insurance legend Robert Lumley that secured our first insurance partners. Once the product had taken root and our partners started winning business from their competitors it had a domino effect that now sees FloodFlash in partnership with almost 10,000 brokers and counting.”Adam
Today, FloodFlash has a strong panel of insurance partners backing their expansion into the US.
Stuart Newcombe, former CUO Innovation and Underwriting Management at the Munich Re Syndicate said: “We are delighted to be able to support FloodFlash as they take their innovative approach to parametric flood insurance to the US market. Their commitment to customer service and satisfaction speaks for itself, and we look forward to working with them as they continue to grow.”
Nancy Watkins, Principal & Consulting Actuary at Milliman added that “The market is so large and so underserved that there’s virtually limitless potential for growth”
Just like any other business developing its own hardware, that relies on expertise and substantial upfront effort before generating profits, FloodFlash required investment. Having been their first institutional investor, we were proud when they raised their $15m Series A round led by Buoyant Ventures alongside Munich Re Ventures, Insurtech Gateway and other Global investors.
“Real solutions are needed to address flood risk in the communities on the front lines of climate change,” said Amy Francetic, partner, Buoyant Ventures. “We are thrilled to lead this first-class syndicate of investors and believe strongly that the FloodFlash team is well positioned for global expansion and success.”
“We believe the FloodFlash approach will appeal to hundreds of thousands of companies in the US and beyond,” said Ben Bergsma, Investment Principal at Munich Re Ventures. “Successfully writing natural catastrophe parametric insurance is no simple task. FloodFlash’s holistic solution, which includes sophisticated building-level underwriting and monitoring as well as an intuitive cloud platform for brokers and agents, is a game changer for the industry.”
Real impact for real people
FloodFlash cover is now being sold by 10,000 brokers and counting, with happy customers across the UK and USA. But nothing will compare to hearing about their very first claim.
“Our first set of claims brought everything home. It was February 2020 during Storm Ciara. For us it showed that the product we had put so much effort in truly changed how businesses could recover from flooding. For our broker partners it showed that their faith was well placed in us.”Ian
3 years on and FloodFlash’s inbox is overflowing in positive messages from brokers and their clients. You couldn’t find another group of people, so passionate about insurance. Their words speak for themselves
Traditional claims can take months of back and forth, arguing the toss on business interruption. Depending on the size of the business, some claims go on for 2 years. These FloodFlash claims seem too good to be true, they have been resolved so quickly.Emma Dixon, Marsh Commercial
“In 20 plus years in the Insurance Industry this is by far and away the best I have seen. From your initial notification, to seeing the client today and settlement all in one working day, truly amazing!!!”Andy Green, CC Insure
The technology really was something revolutionary.Lucy Thornhill, Thornhill Insurance
The FloodFlash team have already touched so many lives, saving so many livelihoods. When I spoke to Adam recently about what’s next for FloodFlash he said. “Our mission is to help more people recover from catastrophic flooding using parametric insurance. That’s why we launched in the US this year. America represents the largest market for flood insurance, also playing host to the largest flood protection gap in the world. After establishing the product there we are looking forward to launches in other similarly flood-stressed markets like Germany, Australia and Japan. There’s lots to do”
Get in touch
If you have an ambitious idea for a climate insurtech and are ready to make the world a better place, we have the experience and the tools to help you get to market faster. Check out our incubator and venture fund or get in touch.
*References: Aon data analysed by FloodFlash