Adaptive partners with Tokio Marine for US parametric outage cover
Adaptive Insurance and Tokio Marine HCC have announced a partnership to distribute a new parametric insurance product designed to provide immediate financial relief to businesses affected by short-term power outages in 18 US states.
The collaboration sees Adaptive Insurance's flagship product, GridProtect, come to market with the backing of Tokio Marine HCC's financial capacity and specialty insurance expertise. GridProtect is the first short-term power outage insurance available across a wide multi-state footprint, including Alabama, Arizona, Colorado, Florida, Georgia, Illinois, Indiana, Kansas, Maryland, Minnesota, Missouri, New Jersey, Nevada, New York, Pennsylvania, Texas, Utah, and Wisconsin.
GridProtect operates on a parametric basis, employing pre-defined trigger events and agreed-upon payouts to streamline claims processing and ensure rapid payment following weather-related power interruptions. This approach aims to address an issue that costs businesses in the US over USD $150 billion each year.
Currently, the product is available to approximately 2.36 million small and medium-sized enterprises (SMEs), which accounts for around 53% of all commercial businesses in the country, according to data provided by the companies.
Product reach
The partnership's launch aims to tackle widespread resilience gaps for US businesses facing unpredictable weather and grid-related challenges. With plans to extend coverage as demand grows, both firms see broad potential for GridProtect and related parametric solutions.
"Partnering with a global specialty insurance provider of Tokio Marine HCC's caliber, whose name and financial strength are among the best in the industry, not only validates the strength of our team, our product, and the underserved niche we're serving, but also gives us the confidence to scale quickly while staying true to our customer-first approach," said Mike Gulla, Chief Executive Officer and Co-Founder of Adaptive Insurance.
Adaptive Insurance anticipates further expansion of its reach both geographically and through the development of additional parametric insurance products within its second year of operation. The company projects that this strategy will allow it to serve nearly 80% of SMEs in the US as the offering matures.
Parametric solutions
The move reflects a growing recognition of the financial threat faced by businesses as outages become more frequent due to severe weather and grid failures. Parametric insurance, with its reliance on third-party data verification and rapid settlement, is being increasingly explored as an alternative to traditional indemnity products, which can involve lengthy claims processes.
Chris Skarinka, President of Tokio Marine HCC - Public Risk Group, Parametric & Innovation, stated: "Power outages are a growing and costly threat to businesses across the U.S. We're excited to partner with Adaptive, reflecting our continued commitment to expanding the use of parametric solutions in response to climate related risk. We look forward to extending our support for insureds around the world and providing immediate financial relief at their time of need."
Tokio Marine HCC, a subsidiary of Tokio Marine Group, brings global specialty insurance capabilities and a track record in climate risk to the partnership. The company highlights its financial strength, referencing ratings of 'A+' from S&P Global Ratings, 'A++' from AM Best, and 'AA-' from Fitch Ratings for its key US subsidiaries.
Adaptive Insurance's approach utilises AI and data-driven parametric triggers, seeking to fill coverage gaps left by traditional insurance and to offer greater predictability for small and mid-sized businesses aiming to protect their operations from the financial fallout of climate events.
