Uses cases for direct risk transfer

  • Storms

    With climate change, hurricanes have become less predictable and tend to intensify more rapidly.

    When a hurricane hits a specific spot, you need instant liquidity to sustain expenses, whether there is damage to your possessions or not.

  • Air Pollution

    Wildfires or volcanic activity are hazards to air quality and can lead to disruption or adjustments to supply chains.

    Besides revenue losses in hospitality, entire aviation and air traffic has to be grounded for extended periods.

  • River Gauge Levels

    Extreme water levels create physical damage and trigger vast interruptions of business with accompanying losses.

    Supply chains can be cut, for example, halt river shipping upon river gauge levels reaching low or high water marks.

  • Pandemic Spread

    Apart from healthcare aspects due to pandemics, massive economic losses due to the interruption of businesses in aviation, hospitality, retail, and other sectors are still largely left uncovered.

    The timing of compensation is critical to sustaining businesses and livelihoods.

  • Quake Intensity

    Classical earthquake insurance focuses on damages to property, whereas losses from non-damage business interruption are hard to insure.

    For example, train disruptions and traffic alone lead to economic losses and additional expenses for stranded passengers.

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Reimagine a resilient world

Year after year we experience more and more severe natural catastrophes due to climate change.

The frequencies and the intensity of the events continues to rise.

At the same time the protection gap, which describes the total losses minus insured losses continues to widen.

Imagine a world where the uninsured businesses and and emerging countries have access to a novel type of protection.

Peer-to-peer, without middlemen and at lower costs.

That’s what DRT™ is all about.

Providing access to direct risk transfer.

Meet the DRT™️ Product Family

  • DRT offers an efficient and scalable mechanism to transfer risk between investors and protection buyers. Risk positions linked to parametric triggers can be managed and traded via DRT as a standardized ILW reinsurance or financial product. For example, you can trade industry loss caps for events like named hurricanes, live and post-event, on an open marketplace.

  • Loans for projects to finance climate resilience or mitigation initiatives. Loans are linked to a parametric trigger which offsets the loan in case of a catastrophic event. Guarantees can be added to enhance credit rating. Once triggered, the loan forfeits, which removes event risk for project finance.

    Compared to Direct Risk Transfer (DRT) in Direct Impact Lending

    There is a 3rd participant, the Guarantor (G), who guarantees the payback at maturity to the Seller (S) in case no event happens during the deal’s term

    The Buyer (B) receives a reduced notional to finance investments once a deal is matched and a G has committed funds

    Need whitelisting for B and known identity for recovery process (private subnet?)

  • The DRT Managed Portfolio is a thematic investment basket comprising a diversified portfolio of insurance-linked instruments, such as industry loss warranties, catastrophe bonds and derivatives. The basket can directly participate in the DDM Marketplace by trading protection.

Visualization: James Eagle

Data Source: EMDat