Demex Group, a technology-enabled managing general agent (MGA), has raised $5 million from a syndicate of existing and new investors led by Blue Bear Capital, to bring its breakthrough Retained Climate Risk Reinsurance (RCR Re ) solution to the market.
Blue Bear Capital is a venture and growth equity firm with a strong focus on global climate challenges. The company has been a major partner for Demex since 2021.
“This additional investment empowers us to deliver new risk transfer capabilities at a time when insurance companies are facing increasing losses due to increased non-catastrophe weather events, ” commented. Bill ClarkDemex CEO.
“Severe convective storms (SCS) cause accumulated losses in midwestern states that exceed hurricane losses in coastal states. Accumulated SCS losses are particularly likely to cause unpredictability, credit rating downgrades, and even the insolvency of insurance companies.
“Our reinsurance broker distribution partners and our risk capacity network are eager to address this risk and Demex RCR Re is the first purpose-built solution designed for severe thunderstorms .”
At the same time, RCR Re is now available and is quickly becoming an important part of insurers’ reinsurance programs as they plan for 2024.
It is clear that there is a well-documented protection gap for SCS and other ‘secondary’ weather disasters including winter storms, heat waves, cold blasts, droughts, and flood.
Secondary perils play an important role in driving insured losses around the world that are now stacked with excess losses generated by ‘primary’ catastrophic events such as hurricanes and earthquakes.
In addition, the increase in the frequency of secondary risks affects the balance sheet of insurance companies.
Secondary risk losses are accumulated in $1.1 trillion since 2000 and surpassing $880 billion of losses due to the main risks during the same period.
Hank HattemerCOO of Blue Bear Capital added: “Blue Bear is excited to lead this phase for Demex given the clear opportunity for Demex’s team and technology to provide a risk transfer solution calibrated to the weather- driven loss experience of insurers.
“The insured loss of SCS is imminent $40 Billion this year, highlighting the need for insurers for immediate financial protection. The Demex RCR Reinsurance solution is the only mechanism in the market to reinsure SCS and other Secondary Peril losses.