HDI Global SE and Descartes Underwriting approved to offer parametric earthquake insurance in Japan

HDI Global SE’s Japan branch, part of Germany-based insurer Talanx AG, has been approved by the Japanese Financial Services Agency to introduce a parametric earthquake insurance product to the Japanese market.

To create this product, HDI Global worked with Descartes Underwriting SA (headquartered in Paris, France), a provider of parametric insurance solutions for natural catastrophe risks. The development also involved HDI Enablers, HDI Global’s unit focused on Risk Finance solutions.

The insurance is designed to address gaps in coverage for Japanese businesses affected by earthquakes. It offers protection for various types of losses linked to seismic events, including property damage, business interruption (direct and contingent), and non-physical impacts. The product does not require a deductible or minimum loss amount.

The insurance, developed in collaboration with Descartes, operates on predefined criteria. Claim eligibility is determined by seismic intensity readings based on the Shindo scale used by the Japan Meteorological Agency.

Once the set thresholds are reached, a fixed payment is issued based on a straightforward declaration. This approach enables faster processing compared to conventional insurance models and can also account for non-physical losses. Policy terms, including triggers and payout conditions, are stated in a clear and accessible format.

The product will be made available through a network of insurance brokers and agencies across Japan. Ikuya Shimada, Descartes’ Director in Japan, will act as the primary point of contact for the rollout.

Dr Dirk Höring, Member of the HDI Global SE Executive Board, responsible for Property Insurance, Engineering Insurance, Marine Insurance, HDI Risk Consulting, said: “The Japanese insurance market landscape is in the middle of a structural change. Regulatory bodies are fostering heightened competition amongst major local insurers and encouraging the introduction of new insurance solutions to further improve customer protection.

“Acting as the preferred Partner in Transformation for our clients, the timing is ideal to deliver this innovative parametric earthquake solution and address longstanding coverage gaps in the Japanese market.”

Casey Sandler, Interim Managing Director of HDI Global’s Tokyo office, commented: “It is a privilege to be able to provide this much overdue protection to our clients in Japan. The ever-present earthquake risk in Japan remains a challenge for businesses. Now the aspect of a coverage gap is drastically reduced by our innovative parametric solution.”

Violaine Raybaud, Chief Operating Officer of Descartes Underwriting, added: “Descartes is honoured to further contribute to the resilience of the Japanese economy, given the suitability of our core parametric approach to earthquake risk.

“We are pleased to collaborate with HDI Global alongside our strategic partner Generali Global Corporate & Commercial, which will act as a key reinsurer of this new product. Together we have delivered a step-change in earthquake protection to the benefits of Japanese insurance ecosystem.”

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