Centinel covers higher risks with parametric insurance
Standard P&C insurance often has exclusions for certain events. In 2019, Soton Rosanwo, founder and CEO of an early-stage insurtech startup, Centinel Insurance, first noticed a need for parametric insurance to cover such events.
“A lot of the risks that we commonly and increasingly face every day are very difficult to insure using standard insurance, especially P&C approaches to covering risk,” she said. “Insurance often comes with opaque exclusions. You go to file a claim and all of a sudden realize you’re not covered. We want to bring transparency.”
Rosanwo saw a way to leverage data and decentralized Technology to cover what would normally be hard-to-insure risks. Her previous experience includes management consulting at Bain & Company and product strategy management at Allstate. In 2020, while at Allstate, she surveyed 400 people and found that 70% lacked coverage for hard to insure risks, and would be willing to pay for it at an amount that would make it viable.
Early this year, Rosanwo began forming a team and building a prototype for Centinel, settling on four types of events to cover: utility interruptions, weather-related events, infectious diseases and event cancellations. Centinel intends to automate claims so that when one of these events occur, payment will be issued on its policies.
“For utility interruptions, the triggers we look at are things like location, duration of the outage, the underlying utility provider, the spread of the outage itself and how many households are impacted,” Rosanwo said. “Your insuring interest is going to be around your location and your property within that location.”
As Centinel works to complete the building of its product by the second quarter of 2023, and launch a pilot by the third quarter, it gained support from Northwestern Mutual’s Black Founder Accelerator, announced in September. This program funds Black entrepreneurs’ startups with $100,000 plus support in the form of coaching, business training programs and introductions to venture capital firms.
“A lot of people talk about how entrepreneurship is a very lonely journey,” said Rosanwo. “One of the great benefits of the accelerator was to see others going through the same thing at the same time. You start to realize there is a lot of commonality in the challenges that we’re facing. What’s really been critical in helping to accelerate Centinel’s progress is the mentorship that it has provided as well as the networking opportunities.”
One of those opportunities for Centinel was pitching on the demo stage at InsurTech Connect in Las Vegas in September. “I had reinsurers coming up to me saying they heard the pitch, they heard this idea, and are really interested in this space, in parametrics,” she said. “Those are the kind of conversations that I knew I needed to have but didn’t necessarily know how to get in the door.”
Centinel is looking for reinsurers to support its model. “To provide this risk coverage, we need to do so in partnership with reinsurers as well as insurers who would operate as capacity providers,” said Rosanwo. The product will serve both individuals and small businesses in its first phase, she added, and in a second phase will branch out to larger commercial clients and businesses, along with licensing its Technology.
“The claims process can be a massive inconvenience, not just to the policyholder but to the carrier,” said Rosanwo. “With Hurricane Ian, both policyholders and carriers were saying, ‘We don’t even know how we will get through the sheer volume of claims.’ We really want to be able to provide that peace of mind when insurance isn’t enough.”