Parametrics Target Power Outages

I’ve spent my entire career in insurance, and what we’re seeing now is a clear uptick in parametric-style products because they are well suited to addressing emerging exposures.

The analogy I often use is that parametric insurance is to insurance what streaming services were to cable 10 or 15 years ago. At first, people questioned why they would pay for streaming when they already had cable. Then they realized they were paying for hundreds of channels but only watching a handful of shows. Streaming allowed consumers to pay for exactly what they wanted.

Insurance is different, of course, because it’s often mandatory. Core policies aren’t going away. But parametric products are exceptionally effective at filling the gaps left by traditional coverage. They address very specific needs and use cases and, because of that precision, consumers are increasingly receptive to them.

I would love to see a very similar trend [to streaming] happen with parametric products, where initially it’ll just be an adjacent offering, and then it’ll become more commonplace. Then, you’ll see new styles of parametrics that take more risk and start to augment the core policy a little bit more.

In some cases, there’s a future where you see an opportunity for parametric products to cover an entire portion of a risk that is typically covered by a core insurance—for example, wind coverage. You want to buy wind coverage separately and pull it completely out of your core policy and insure it on a parametric offering that’s trigger-based.

I think carriers and reinsurers will actually be more comfortable with that idea, because it’s sharing the risk. The beauty of a parametric product is that it’s a binary—“if, then.” The trigger happens and you pay out X amount and know what your tail exposure is—it’s a known amount. So, you’ll see a lot of expansion.

The future is unbelievably bright for parametrics, especially with where data is headed. The ability to access all the different data assets available today will be a major portion of parametrics’ future in the insurance space.

AI is an incredible tool, but it is exactly that. AI has just as many issues as any other technology. AI allows you to do things very, very quickly to a certain point. AI will speed up the time it takes to build and develop a product. It’s very good when looking at large data assets.

Then you move into the technology. The infrastructure in the insurance space, the distribution space, and the utility space is changing at a very rapid pace. A lot of companies have now moved everything into a cloud-based infrastructure. So, you have access [to data] through APIs and more real-time capabilities to access data on demand. And that is the core piece that you need to use a parametric product the way that it is designed to be used.

As a career underwriter, the piece that is the hardest to insure against is the moral hazard that exists in insurance. Somebody has a claim, they try to drive up the cost, or they’re filing fraudulent claims. There are many other things that can happen that just drive up insurance costs in general. If you have a properly priced parametric product that uses third-party data assets, similar to what we’re building with Adaptive, you eliminate the moral hazard, because it has nothing to do with the customer. It’s not technically insuring the customer themselves.

So, you start with AI. You use AI as a tool to help build your technology faster and get your data cleaner. You build your tech stack in a way that’s cloud-based and API-based, and you can access all the relevant data sources that you need. Then, you structure a parametric product around that to make sure that, firstly, it fills an actual need. Then, you leverage your technology to create the trigger mechanisms. Together, this provides the right experience around the parametric product, from purchase to pricing, to [filling] coverage gaps, to claims.

Our first product, GridProtect, is a short-duration power interruption product designed to cover grid outages lasting less than 24 hours. It’s intentionally simple. If the power goes down for a defined period, say 12 hours, once that threshold is met the policy pays out the coverage amount the customer purchased.

Today, there is very limited coverage for this type of event under standard policies. Some businesses can purchase an off-premises power endorsement, and others have business interruption coverage, but those typically don’t trigger until two or three days into an outage.

The reality is that more than 90% of power outages in the U.S. last less than 24 hours. Yet businesses lose an estimated $150 billion annually due to power interruptions. That represents a significant coverage gap. GridProtect was built to address it and to give agents something concrete they can offer their customers.

Historically, reliable power has been something most Americans take for granted. That’s changing. We’re dealing with new weather patterns, rising energy consumption, political pressures, and rapid growth in data usage. Electric vehicles, data centers, and broader electrification are placing unprecedented strain on the grid.

Power reliability is now a nationwide issue, not just one driven by catastrophic events. Some of the states with the worst power reliability are Virginia, Michigan, and Maine, not Florida, Texas, or California. Much of this is driven by aging infrastructure, increasing demand, and grid congestion. Northern Virginia, for example, has the highest concentration of data centers in the world.

Utilities can only generate a certain amount of power, and upgrading infrastructure is both expensive and time-consuming. From our perspective, the key insight was recognizing that this coverage gap exists everywhere. That’s why we’re rolling GridProtect out nationally as quickly as possible. We’re currently live in 18 states, covering roughly 50% of U.S. commercial businesses and residential properties, including Texas, Florida, New York, Georgia, Illinois, Tennessee, Utah, and Arizona.

Absolutely. Uri played a significant role in shaping our understanding of utility infrastructure and the difficult decisions utilities are forced to make during extreme events. Over 200 people lost their lives, and more than 4.5 million Texans lost power for multiple days.

That event highlighted how weather-driven strain can force utilities to prioritize protecting infrastructure, sometimes at the expense of customers. Today, with exponential growth in data centers and energy demand, that strain is only increasing. The need for more power is clear but generating it is neither simple nor inexpensive.

No. That was a deliberate design choice. GridProtect is priced and underwritten to respond to outages regardless of cause. The trigger is the outage itself, not why it happened. Behind the scenes, we analyze extensive data to understand outage causes, duration, utility response times, and grid behavior. We continually train our models to account for everything from fallen tree branches and vehicle collisions to overloaded transformers, wildfires, or hurricanes.

From the customer’s perspective, however, none of that complexity matters. If they purchase a 12-hour outage policy and the power is out for 12 hours, the policy triggers. We monitor the grid through third-party data sources, notify the customer once the outage trigger is met, again when the claim has been verified, and when the payment is on the way, typically all in just days.

That experience is fundamentally different from traditional insurance, where claims can take months to resolve. Parametric products remove friction at the moment customers care most. Claims experiences are where insurance reputations are ultimately made or broken.

For insurers, the benefit is equally clear. If the trigger happens, a known amount is paid. There is no ambiguity around exposure. If a business purchases a $50,000 GridProtect policy and the outage threshold is met, the payout is $50,000. That certainty contrasts sharply with the variability of traditional commercial or homeowners claims.

We will continue expanding geographically. We already have seven additional states lined up to offer GridProtect for 2026, including California, which will bring us to coverage of more than 80% of the U.S. population.

We are also developing new products. Two are focused on deductible buybacks, one for commercial lines and one for personal lines, designed to help customers manage out-of-pocket exposure. Many Americans simply do not have the savings required to absorb large deductibles after a loss, and these products are intended to address that reality.

We’re also powering a restaurant-focused product in partnership with Tokio Marine starting in early 2026, followed by a potential expansion into flood coverage.

Everything we build is grounded in resilience. Our products are designed to help businesses and property owners strengthen their financial resilience against emerging risks, essentially investing in the long term for their property.

Power outages, infrastructure strain, and operational interruptions don’t always look like headline-grabbing catastrophes, yet they can have an outsized financial impact. Rather than debating causation or loss adjustment after the fact, we can provide certainty at the moment it matters. As climate patterns, energy demand, and infrastructure pressures continue to evolve, we believe products like GridProtect will play an increasingly important role in helping customers adapt without overcomplicating their risk strategy.