By Henry Gale

May 6 - (The Insurer) - Cincinnati will start underwriting parametric natural catastrophe risks at Lloyd's through a partnership with Yokahu, the companies told Parametric Insurer.

The arrangement is the first binding authority agreement with full authority on Yokahu's many-to-many digital exchange cat-risk.com, which aims to facilitate faster parametric placements in the London market.

The delegated authority partnership covers tropical cyclone and earthquake (re)insurance globally, as well as flooding and other perils in specific territories.

"Diversification has consistently been a fundamental pillar of Cincinnati Global Underwriting's strategic direction, and the move into the parametric insurance market represents a considered step into a specialised and increasingly significant area of the insurance sector," said Michael Harris, senior property underwriter at Cincinnati Global Underwriting.

Cat-risk.com, which Yokahu launched in March, prices risks automatically and allows multiple carriers to co-insure them based on their appetite. "This allows carriers to enter the parametric space with smaller capacity and access reduced portfolio volatility," co-founder and CEO Tim McCosh said.

Yokahu administers each insurer's portfolio separately and allocates capacity to each deal based on BIPAR principles (rules which govern how intermediaries place risks with multiple insurers).

With Cincinnati providing delegated authority capacity, "other carriers will now be able to deploy smart follow-supporting capacity on the exchange, or set their own binder parameters", McCosh said.

The partnership also enables risks to be bound more quickly, McCosh said. "To date capacity on cat-risk.com has been available only on a prior submit basis with a 48-hour turnaround time. Now a broker can bind a risk within agreed parameters instantly."

This speed, and the fact that there are no minimum premiums, helps extend access to parametric solutions to organisations with smaller budgets, he added.

At its launch, the cat-risk.com exchange provided limits of up to $5 million per transaction for hurricane, typhoon and storm risk, with Yokahu planning to add support for earthquake and flood risks in the near future.

Harris said Cincinnati had chosen to work with Yokahu because of the firm's commitment to closing protection gaps in underserved markets, expertise in parametrics and use of data and technology to deliver scalable coverage.