WTW business Willis has launched a new sensor-based parametric insurance solution designed to protect UK racecourses from the effects of localized flooding.
The product was developed in partnership with Previsico, Descartes Assurance (MGA) and Generali as insurance company.
In the UK, flood risk is rising, with associated costs expected to increase by up to 50% to £3.6 billion by 2050.
Racecourses, often located in low-lying floodplains, are particularly vulnerable to flood-related property damage, resulting in costly cleanup, repairs and renovations, as well as financial losses due to business interruption. As a result, insurance companies often exclude certain locations from flood coverage or impose very large deductibles.
Royal Windsor, one of 16 UK racecourses owned and operated by policyholder Arena Racing Company (ARC), is the first to implement a sensor-based parametric flood policy. Like several other ARC racecourses, including Worcester and Southwell, Windsor Racecourse is highly susceptible to flooding due to its location directly on the River Thames, and was previously considered uninsured against flood risks.
Claire Wilkinson, managing director of alternative risk transfer solutions at Willis, said: “Conventional insurance often struggles to provide affordable flood cover in high-risk areas, resulting in high premiums, large excesses or complete flood exclusions. In contrast, parametric solutions offer an alternative that is tailored to the specific needs of the client. When measurable flood depth triggers are met, claims are automatically paid in a timely manner, regardless of actual loss. These solutions are responsive, objective and offer complete flexibility in the use of claim proceeds.
The parametric solution involves installing flood sensors supplied by Previsico at a location on the insured property chosen by ARC to reflect its specific risks and requirements.
The policy is designed so that ARC automatically receives payouts when sensors detect water levels reaching a selected trigger depth. Benefits are adjusted based on maximum water depth, up to the agreed policy limit. This allows claims to be paid quickly without the need for a lengthy loss adjustment process.
Another benefit of the sensor-based approach is continuous monitoring of water levels. This can provide early warning of potential flooding, allowing customers to implement flood risk management protocols, including moving sensitive equipment to higher ground.
The solution can also be replicated at other flood-affected sites and tailored to the specific circumstances of each racecourse, providing ARC with coverage for risks that would normally be considered uninsurable.
Kieran Gallagher, Group Operations Director at ARC, said: “We are grateful to the Willis team for delivering this new insurance solution which will bring real benefits to Royal Windsor Racecourse. The company has not been able to provide insurance for floods before, so this new approach combined with Previsico’s ongoing monitoring of river levels will be important.”
Hamid Khandahari, data scientist and parametric underwriter at Descartes Underwriting, commented that by gaining a deep understanding of site-specific flood risk, combined with historical flood data and the impact of river defense and relief channels, they are able to support tailored parametric insurance solutions where traditional underwriting options are not available.