The European Space Agency and Liberty Mutual Reinsurance (LMRe) have agreed to begin a three-year collaboration to explore how satellite data can be used to develop parametric insurance products for terrestrial assets, the organisations said this week.
The initiative will assess whether Earth observation (EO) data, analytics and modelling tools can support insurance products that automatically trigger payouts when predefined conditions are met, such as extreme wind speeds or satellite-detected forest damage. Parametric insurance differs from traditional indemnity cover by linking payments to objective data thresholds rather than post-event loss assessments.
The partnership is set to begin in February with a workshop led by LMRe, which will outline risk challenges facing the forestry sector. These include growing exposure to windstorms, wildfires, invasive species and climate-related power disruptions. Following the workshop, the reinsurer will invite commercial companies to propose technical solutions.
LMRe said it is seeking input from firms specialising in synthetic aperture radar (SAR), optical EO, artificial intelligence, geospatial analytics and ground-based wind modelling. ESA will act as a technical partner, supporting the selection of candidates and the development of demonstration projects.
By relying on data-driven triggers, parametric insurance products are intended to reduce claims processing time and costs, while providing faster payouts to policyholders. The approach is increasingly being examined by insurers as climate change raises the frequency and severity of weather-related losses.
“This is a smart move. There’s ample past practice demonstrating the effectiveness of satellite geospatial data in quantifying environmental risk across property and casualty lines,” said Yukun Yin, founder and chief technology officer of Charter Space, which launched an insurance product for space assets last year.
Industry participants say the collaboration could also benefit Europe’s EO sector, which has long sought wider adoption of satellite data within insurance markets as part of broader climate risk management strategies.
