WTW business Willis has announced a new sensor-based parametric insurance solution for UK race courses. As the sport looks to adapt to increasing localised flooding relating to climate change, the policy has been designed in collaboration with the flood forecasting company Previsico, Descartes Underwriting and Generali, which will act as the insurer.
Claire Wilkinson, managing director for alternative risk transfer solutions at Willis, said, “Traditional insurance often struggles to provide affordable flood cover in high-risk areas leading to high premiums, large excesses or complete exclusions for flood. In contrast, parametric solutions offer an alternative approach, tailored to the specific needs of the client. Claims are paid automatically and promptly when a measurable flood depth trigger is met, regardless of actual damage. These solutions respond quickly and objectively, offering complete flexibility in the use of the claim proceeds.”
Flood risk is increasing in the UK, with related costs on track to rise by up to 50% and hit £3.6 billion by 2050. Often located on low-lying floodplains, with trees cleared away, race courses are especially vulnerable to flood-related property damage, requiring costly clean-up, repairs and refurbishment. With the financial losses also incurred from business interruption, insurers are accused by the racing industry of excluding certain locations for flood protection, or imposing very large deductibles.
Royal Windsor Race course, one of 16 UK race courses owned and operated by the policyholder Arena Racing Company, is the first of its locations to implement a sensor-based parametric flood policy. As with several other race courses owned by ARC, including Worcester and Southwell, Windsor Race course is in a highly flood exposed location due to its position directly on the River Thames, and has previously been uninsurable for flood risk.
The Willis approach involves installing a unique flood sensor, provided by Previsico, on the insured property at a location selected by ARC that reflects their precise needs and specific exposure. The policy is designed so that when the sensor detects flood levels at the selected trigger depth ARC automatically receives a payout. This payout scales according to the maximum water height, up to the agreed policy limit.
By removing uncertainty, cost and time from the claims process, claims are paid quickly with no protracted loss adjustment process. An additional benefit of the sensor approach is the continuous monitoring of water levels. This provides early warning of potential flooding, enabling the client to manage the impact by implementing flood risk management protocols, including moving sensitive equipment to higher ground.
Kieran Gallagher, group operations director at ARC, commented, “We are grateful to the team at Willis for offering this new insurance solution, which will be of real benefit to Royal Windsor Race course. The business has previously not been able to insure against flooding, so this new approach, combined with the ongoing monitoring of river levels by Previsico, will be hugely important.”
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