Jumpstart, a licensed surplus lines insurance broker selling online and using Lloyd’s capacity, began offering earthquake insurance in California in 2019 in the form of a parametric product, with payments linked to a formula and based on U.S. Geological Survey earthquake measurements. The company provides a set payout amount based on the quake intensity, rather than the cost of damage.
Policyholders pay a monthly amount and are paid a set amount automatically if there is an earthquake in their area. The policyholder receives the funds in a matter of days with no deductible, no adjusters, and no paperwork. Quick coverage payout offers range up to $10,000 for individuals and $20,000 for small businesses.
Late last year, Jumpstart started offering its product in Oregon and Washington as well.
Jumpstart’s policies are available to renters, homeowners and businesses. The average monthly cost in California is $20 per month, the average in Washington is $13, and in Oregon it’s $8 per month for a $10,000 payout, according to Jumpstart. Prices are double for a $20,000 payout.
Neptune Flood is a private flood market backed by a roster of underwriters including AXA, Lloyds of London, and Transverse and is an alternative to the government’s National Flood Insurance Program. Neptune Flood’s residential and commercial flood products are available nationwide.
Neptune uses artificial intelligence-driven technology to make it fast and easy for consumers to buy, and agents to sell, insurance. The company is based in St Petersburg, Fla.
During the transition, Jumpstart coverage will be available online via waitlist on Jumpstart’s website for California, Oregon and Washington customers. Neptune’s agent network in those three states will have access to Jumpstart products in the coming weeks via the Neptune agent portal.
“Earthquake is a natural add-on to flood insurance as agents look to help their clients cover catastrophic risks,” said Jean-Luc Eckstein, Neptune’s chief customer officer.
“Broadening our reach to the earthquake peril and to parametric insurance more broadly will help us fulfill our mission to use technology to change the way that consumers buy, and agents sell, insurance,” said Neptune CEO Trevor Burgess. “We want it to be fast, easy, and economical.”
Kate Stillwell, founder and CEO of California-based Jumpstart, becomes president of Jumpstart Parametric Insurance at Neptune. “We share a vision to revolutionize catastrophe insurance and close protection gaps. This acquisition will accelerate the expansion of parametric and make coverage accessible to more people, through Neptune’s distribution and capacity networks. And flood risk is the logical next peril for consumer parametric, which makes Neptune a natural home for Jumpstart,” Stillwell said.
Stillwell is a former structural engineer and earthquake risk consultant. From 2010 to 2012, she was an earthquake products manager for EQECAT Inc., a catastrophe risk modeling firm acquired by California-based data and analytics firm Corelogic in late 2013.
Stillwell has said she doesn’t see her firm as in direct competition with the California Earthquake Authority, the not-for-profit, publicly managed organization that insures the vast majority of the earthquake risk for homeowners in California.
“This is not a substitute for CEA,” Stillwell said. “There is no overlap in coverage.” Customers may choose both, while others could buy either the Jumpstart product or get a CEA policy, according to Stillwell.
According to analysts at AM Best, the country’s flood insurance market is slowly transitioning toward private insurers providing additional options to the federal government’s program for those seeking coverage. The private sector flood providers are being selective, tending to avoid risks in flood-prone areas and concentrating more on commercial properties than homeowners, AM Best said.
AM Best calculates that while the NFIP still bears the heaviest burden of the U.S. flood market, private flood insurers generated almost $3.1 billion in total direct premium during 2016-2020. The $735 million in direct premium in 2020 represented the largest amount during that period.
The NFIP is administered by the Federal Emergency Management Agency, which has developed a new rating structure under which the annual premium rate is expected to decline for a quarter of NFIP policyholders. However, many will see their rates increase and reach their full risk rate in approximately five years. Eventually, the new rating measures should lead to more adequately priced NFIP risks and more competitive coverage offered by private insurers, AM Best said.