The world first insurance product that protects investors from losses in the share price which are caused by allegations of management misleading or deceiving the public.
Such events include accounting fraud, bribery, collusion etc...
When these events happen and the market believes the allegations, they cause sudden and severe losses to shareholders. Think Enron, Steinhoff, MTN, VW and many more around the world.
The sudden and severe nature of losses, linked to news of management wrongdoing, provides the basis for the mechanics of the product. When there is news in the media alleging management wrongdoing in a company, and the share price drops by 10% on the day of or after the news, our claims period is triggered. The claims period is set at 30 days, where our client can sell their shares. If they sell their insured shares during these 30 days below the trigger price a claim is paid as the difference between the price at which they sell their shares and the trigger price. For example, if a company’s share price is CU100 and there are allegations say of accounting fraud, and during the day the share price drops below CU90, then our claims period is triggered. If a client sold their insured shares at CU60, a claim would be paid of CU30 (90 – 60 = 30) per insured share sold.
Insurers gain access to a new risk category (true blue-ocean) that is not correlated to most existing risks adding to diversification within the insurers total book. The total addressable market is the combined market capitalisation of listed companies on major exchanges, where those shares are held by retail investors. This offers diversification across thousands of companies on the larger exchanges. Triggers for claims based on external events make this a pure parametric insurance product.
The product is integrated with trading platforms which allows investors to add the protection to their shares with the click of a button. The technology is primarily API driven and has handled over 7,200 insurance sales in its first 15 months, with sales increasing monthly.
We provide the technology to integrate with the trading (investment) platforms and to manage the product, with the risk carrier having the final say in any claim and risk management decisions. The product is 100% automated for our clients, from the policy purchase to eventual claim payment, making this a pure parametric insurance product. The tech includes risk management components so that the insurable status, limits and prices can be adjusted and managed per individual company.
Responsible for this content
- South Africa
- United Kingdom
- United States
- Hong Kong