Skyline Partners is a parametric insurance MGA.
The company uses smart contracts to make automatic payments to policyholders based on weather events such as flood or drought. The company’s first product (due to launch in Q2) will be for tea farmers in India.
Co-Founder Laurent Sabatié (an actuary formerly with AXA, AIG and Lloyd’s syndicate ProSight) is however keen to point out that Skyline is not a micro-insurance proposition. In fact, the company’s model is to target SME customers through distribution partners. In their Indian pilot, the distribution partner is an AgriTech company, which has a mobile app. Skyline’s product will be embedded into the partner’s proposition via an API.
India is an attractive market for Skyline. As Laurent explains, agriculture accounts for around 20% of GDP meaning that demand for weather insurance is large. Equally supply of such products is low whilst the penetration of smartphones is increasing, making digital distribution feasible.
Apart from agriculture, the company is also targeting renewable energy. A wind energy product for European generators is in the pipeline.
The company was founded in 2017 by Laurent and his co-founder is Gethin Jones, formerly a programme manager with Xchanging, RSA and Chaucer. The team’s objective is to use parametric products to close the global ‘protection gap’ – losses not currently insured. According to Swiss Re, 70% of global economic losses from natural catastrophes – or $1.3tn – were uninsured.
The company is backed by OneAdvent, an MGA incubator based in London.
THE OXBOW PARTNERS VIEW
We are generally proponents of parametric insurance. In 2017 we wrote a piece on our blog about how it could (in certain circumstances) enhance the customer experience in personal lines by removing the days, weeks or months of argument that customers have with their insurer about the quantum of a loss (like the value of your stolen, five-year-old VW Golf).
At the same time, we like the efficiency of parametric insurance. In our 2017 Bitesize Profile of FloodFlash (a 2019 InsurTech Impact 25 Member) we explained how parametric MGAs take a huge amount of cost out of the insurance value chain. Underwriters need to estimate only frequency of an event (but not severity because that is a fixed benefit in the contract) and do not need claims handlers (beyond fraud).
The second interesting trend demonstrated by Skyline Partners is the ability of tech-driven MGAs to embed their product in third party propositions. We generally like this approach to distribution. Skyline’s Indian AgriTech distribution partner will be communicating with its users just as they may be hoping for good weather – and could provide an attractive guarantee at that point: “remember to plant your seeds today – and why not insure against a poor harvest whilst you’re at it”.
Impact 25 Member Hokodo (Bitesize Profile) is another example of an InsurTech that is embedding insurance into third party propositions, albeit in a very different market.