Demex reopens aggregate loss reinsurance market for frequent storm losses with new solution

Demex, a climate risk MGA and data analytics firm based in Washington, D.C., is driving a shift in how the reinsurance industry handles the financial burden of severe convective storms (SCS).

With a new aggregate, working-layer reinsurance structure, Demex has become the first to successfully provide scalable coverage for high-frequency storm risks that have traditionally been excluded from standard catastrophe reinsurance.

The timing of this solution is crucial. According to broking group Aon, SCS losses in the United States soared to $54 billion in 2024, far surpassing the $33 billion average since 2015—a figure already nearly double that of the previous decade.

As weather-related claims increasingly impact insurers’ financial results, Demex has stepped in with a mechanism that offers both protection and predictability.

Demex’s 2025 programme, developed in collaboration with five global reinsurance brokers, has secured more than $75 million in coverage limits. The company indicates that additional capacity is already lined up, suggesting that reinsurers are eager to support this model as early performance data validates its reliability.

Historically, reinsurance has focused on events like hurricanes or earthquakes—less frequent but highly damaging. However, storms like hail, tornadoes, and wind events occur more regularly and in many regions, making them harder to model and, until now, difficult to reinsure effectively.

Insurers have been left to absorb the majority of these losses, leading to higher premiums, increased deductibles, or withdrawal from risk-prone areas.

Demex addresses these gaps by using a model that draws directly from actual claims data, tailored to each insurer. Instead of relying solely on catastrophe modelling, the company’s experiential model builds an index based on how losses accumulate over time.

This has enabled a more accurate view of risk—and already, some clients have seen payments triggered under their 2025 reinsurance programs.

One such client is Innovated Holdings Inc., a regional insurance group operating in the Midwest through subsidiaries like CFM Insurance and Forreston Mutual Insurance Company. The company partnered with reinsurance broker Acrisure Re and integrated Demex’s structure ahead of the 2025 storm season.

“Innovated Holdings’ member companies provide insurance across many areas prone to severe convective storms,” said Jake Black, CEO of Innovated Holdings.

He continued: “We use a variety of different measures to minimise our financial risk from storm losses. Being able to access Demex’s innovative reinsurance solution using trusted reinsurance brokers and capacity partners is an important part of these measures. The policy triggers are clear and easy to understand. The storm season so far in 2025 has meant we are already receiving a claim payment. I would encourage all insurers with an exposure to severe convective storm losses to evaluate this new SCS reinsurance solution.”

Jim Botsis, Head of the Chicago Office at Acrisure Re, added: “At Acrisure Re, we take pride in our deep understanding of the full range of reinsurance solutions available to support our clients. Reinsurance plays a vital role in enhancing an insurer’s financial resilience.

“That’s why we were particularly pleased to introduce Demex’s Retained Climate Risk Reinsurance solution for the first time this year. Severe convective storms often expose insurers to significant losses, and the demand for innovative, forward-looking solutions like this continues to rise.”

Demex’s Chief Risk Officer, Matt Coleman, underscored the growing appetite from the reinsurance sector: “The capacity transacted with Demex so far is just the tip of the iceberg. Our current discussions indicate there is already more than $500 million of capacity available from reinsurers for carriers wishing to secure financial protection for 2026.”

Coleman added: “Thus far we have accumulated over $30 billion in ground-up claims data informing our model, and Demex analysts have identified that a minimum of 15% of storm losses are not captured by the traditional industry data providers.

“Some may miss as much as 50%, making accurate risk pricing extremely challenging for both primary carriers and reinsurers. That’s why our use of first-hand claims information directly from the carrier is so fundamental to developing a solution that reinsurers are happy to back with affordable capacity. Ultimately, the solution offers them an attractive risk-adjusted return on capital.

“This is genuinely new reinsurance capacity from A-rated providers for insurance carriers, many of whom are facing an existential threat from accumulated SCS losses. As we look forward to the 2026 risk year, we’re already seeing even more engagement from reinsurance brokerage firms, increased interest from carriers and an expanding reinsurance capacity network.”

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