FloodFlash, an InsurTech startup which offers a way for customers to insure flood risk, has raised £1.9m in Seed funding from investors including LocalGlobe, Pentech Ventures and InsurTech Gateway.
The startup has developed a tech-led approach which makes flood insurance available to everyone, including those with the highest flood risk.
A FloodFlash policy pays out a pre-agreed, fixed sum as soon as a pre-defined level of flooding occurs. When the flood takes place, it triggers an internet-connected water-sensor and the payment is made immediately to the policy holder.
Founders Adam Rimmer and Ian Bartholomew, set up the business following a combined 11 years modelling and structuring of parametric catastrophe bonds.
Rimmer said: “Every year tens of thousands of business owners lose their livelihoods because they have been unable to take out an affordable policy that protects their business.
“In the immediate aftermath of a catastrophic flood, people care less about dollar-for-dollar reimbursement for damages and more about whether their business will survive at all.
“We want to make the world more resilient to catastrophic events and we believe FloodFlash’s event-based insurance is absolutely the best way for insurers to cover higher-risk areas,” he added.
The startup is regulated by the FCA and is carrying out a live pilot with a group of SMEs in parts of the UK with significant flood risk, including Carlisle.
Bartholomew added: “The efficiencies in the technology that we have developed make FloodFlash policies available to those who need it most. The FloodFlash sensor and high-resolution pricing algorithms are essential parts of that. We think that by pricing risk in this way, and by promising instant settlement, we can help to resolve what is arguably the largest market failure in insurance.”
FloodFlash’s insurance capacity is provided by Everest Re through their syndicate at Lloyd’s of London.
The company currently employs five people but expects to double that over the coming six months, as it prepares for product launch in October.
FloodFlash’s team currently includes published scientists, expert insurance software engineers and a former Dyson product designer.
Tara Reeves, partner at LocalGlobe, explained why she invested in the company: “Climate change is leading to more extreme weather events, but these are often hard to insure. Parametric insurance dramatically reduces underwriting and loss adjustment costs, and those savings can be passed on to the consumer. Adam and Ian’s background in risk modelling and hydrology is uniquely suited to this challenge.”