Skyline Partners to develop parametric solutions for subsidence risk

By Henry Gale

April 7 - (The Insurer) - Parametric specialist Skyline Partners plans to develop dedicated coverage for subsidence risk under a partnership with the European Space Agency, the company told Parametric Insurer.

The project with ESA's business applications and space solutions programme involves using satellite data for parametric drought and wildfire covers.

"Subsidence is, for me, the largest risk that hasn't been touched upon yet for parametric," said Laurent Sabatié, Skyline's co-founder and executive director.

He explained that droughts are having long-term effects on residential properties, with (re)insurers picking up the costs. PwC UK estimated in 2023 that climate trends could lead to subsidence costing the industry more than 1.9 billion pounds ($2.5 billion) by 2030.

It can take years for the effects of subsidence to become visible, Sabatié said, with cracks in walls or foundations sometimes caused by droughts that occurred two or three years previously. Parametric covers could be triggered by drought conditions before those effects are realised, he suggested.

"If you were able, as an insurer, to detect that and potentially provide access to a risk remediation measure to help solve the problem ahead, then there is an issue solved through parametric solutions," Sabatié said.

The project with ESA gives Skyline the time, resources and access to capabilities it needs to develop covers for subsidence risk, he said. While soil moisture data is already used in some parametric policies for the agriculture sector, ESA also provides information on soil properties that affect the risk of subsidence.

Through the ESA partnership, Skyline aims to develop parametric products that can be easily deployed by intermediaries and carriers, co-founder and executive director Gethin Jones added.

Jones said he hoped the initiative would attract more capacity for parametric wildfire and drought coverage.