The business case, explained plain: why free satellite data, turned into a trigger index, is worth paying for — and how it cuts reinsurer losses by 30-50%.
After Typhoon Yagi hit Vietnam in September 2024, causing US$3.3 billion in damage, the traditional insurance claims process looked like this:
During those 3-12 months, businesses die, farms rot, and governments borrow at high rates. The damage compounds. And reinsurers pay anyway — just slower, with more admin cost, and often more total payout because damage escalated while waiting.
Parametric insurance doesn't replace traditional insurance. It adds a fast-paying layer on top:
The trigger is objective and transparent: when the SAR-Fusion Index hits 75, the policy pays out. No debate. No adjuster. No dispute. The index is computed from satellite data, rain gauges, and river levels — none of which can be manipulated by the insured.
| Traditional Indemnity | Parametric Trigger (Ours) | |
|---|---|---|
| Payout speed | 3-12 months (adjust, dispute) | Days (trigger = payout) |
| Claims handling cost | 15-30% of payout | <2% (automated) |
| Dispute risk | High — subjective damage assessment | Near-zero — objective trigger index |
| Moral hazard | Moderate — inflated claims possible | Zero — satellite data can't be gamed |
| Speed of capital recovery | Slow — capital tied up 6-12 months | Fast — payout frees capital quickly |
| Basis risk | N/A (claims adjuster decides) | Low (but exists) — multiple signals converge |
| For the insured business | Cash flow crisis while waiting | Immediate liquidity to rebuild |
| For the reinsurer | Slow, expensive, unpredictable | Fast, cheap, predictable |
Result: Businesses wait 6-12 months for money. Many go bankrupt. Reinsurer pays full amount + handling costs. Damage compounds during wait.
Result: Insured business receives fast liquidity to prevent cascading damage. Reinsurer pays less total (early capital prevents secondary damage). Claims handling cost drops to near-zero for the parametric portion.
Traditional flood claims cost 15-30% of payout to process (adjusters, lawyers, disputes). Parametric triggers eliminate this:
| Traditional Yagi claim | US$200-400M insured losses × 20% handling = US$40-80M wasted |
| With parametric layer | Trigger fee US$50-100K × 5-8 triggers × 3-4 insurers = US$1-3M total |
| Net savings | US$37-77M per event in handling costs alone |
When businesses get capital within days, they can:
Reinsurers must hold capital reserves against potential claims. Parametric triggers:
We use free satellite data. ICEYE doesn't. This means:
| SAR-Fusion (Ours) | ICEYE-style | |
|---|---|---|
| Data cost per trigger | US$0 (Sentinel-1 + free sources) | US$50-200K/yr (satellite amortisation) |
| Gross margin | 90%+ | 50-70% |
| Price flexibility | Can undercut any paid-data competitor | Constrained by satellite costs |
| Scalability | Add basins for zero marginal cost | Each new basin = more satellite tasking |
As a one-person OPC in Singapore, our cost structure is the advantage:
A US$50-100K/trigger product with 90%+ margins, sold to 3-4 insurers with 5-8 triggers each, is a US$2-5M ARR business that costs less than US$15K/year to operate. That's the asymmetric win.