Climate-focused Demex bags $5m to transform the reinsurance market

The Demex Group, described as the innovators behind unprecedented reinsurance solutions tackling accumulating losses from secondary perils, has successfully garnered an investment of $5m.

This recent funding round drew the attention of both returning and fresh investors, with Blue Bear Capital taking the lead. A notable venture and growth equity firm centred on global climate challenges, Blue Bear Capital has been collaborating closely with Demex since 2021.

Delving deeper into the Demex Group’s offerings, they’ve constructed unparalleled reinsurance mechanisms specifically targeting the escalating losses attributed to secondary perils. These secondary perils, encompassing winter storms, heatwaves, cold spells, droughts, and floods, have historically been the cause of tremendous global insured losses. Such losses, in some cases, even surpass the damages caused by more commonly recognised ‘primary’ catastrophe perils, such as hurricanes and earthquakes.

The newly acquired funds are earmarked for launching revolutionary weather risk transfer capabilities. Bill Clark, Demex CEO, elucidated the urgency of this venture, emphasising the mounting losses from frequent non-catastrophic weather events.

He highlighted, “Severe convective storms (SCS) induce losses in the midwestern states surpassing even the hurricane-inflicted damages in coastal regions. This rising trend of SCS loss is contributing to unpredictable earnings, credit downgrades, and potential bankruptcy for many insurance firms.” Demex’s RCR Re solution, tailor-made for severe thunderstorms, is poised to become an indispensable facet of insurers’ reinsurance strategies in the forthcoming year.

Since 2000, secondary peril losses have amounted to an overwhelming $1.1trn, overtaking the $880bn losses caused by primary perils within the same timeframe. Traditional reinsurance practices have often overlooked or gravely restricted secondary peril coverage, compelling insurers to self-insure against disproportionately larger losses than ever before.

Blue Bear Capital’s COO, Hank Hattemer, conveyed his enthusiasm about spearheading the funding round for Demex, acknowledging the invaluable potential of Demex’s groundbreaking tech solutions. He asserted, “Demex’s RCR Reinsurance mechanism stands out as the market’s sole approach to reinsuring against SCS and other Secondary Peril damages.”

Inaugurated in 2020, Demex bridges the realms of climate, insurance, and technology. Last year, they unveiled the Retained Climate Risk Reinsurance, a distinctive product relying on Demex’s exclusive Proxy Claims Index. This initiative permits insurers to economically purchase reinsurance covering secondary peril risks accumulating over periods.

Demex CEO Bill Clark said, “This additional investment empowers us to deliver new weather risk transfer capabilities to insurance companies that are facing escalating losses due to the increased frequency of non-catastrophic weather events.”

Hank Hattemer, COO of Blue Bear Capital, commented, “Blue Bear is excited to lead this round for Demex given the unequivocal opportunity for Demex’s team and technology to provide a risk transfer solution that is calibrated to the weather-driven loss experience of insurers.”

Previously, Demex has made noteworthy strides in the FinTech realm, leveraging their pioneering ethos and cutting-edge technology.

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