Original text here from Patrice Bernard (LinkedIn)
The concept of parametric insurance has long been applied to weather events (for successful vacations or good agricultural harvests), airline delays, and cloud computing failures. Now, thanks to Anansi, parcel transport also has its solution.
With the constant growth of online commerce and its unique logistical challenges, which cause so much frustration among consumers, there's a huge market opportunity for this startup. However, it targets merchants and professional intermediaries, offering them coverage for the uncertainties of delivery, while leaving them to resolve disputes directly with their customers (through reshipment, refunds, etc.).
Subscription and setup are, as expected, extremely straightforward. For instance, with the integrated version in the Shopify e-commerce platform, a seller simply adds the dedicated plugin to their site, selects the price range they want to insure (up to 25,000 British pounds, although some categories of goods are excluded), and that's it. It costs them 1.5% of the insured value for domestic UK shipments and 1.8% for international shipments.
Behind the scenes, the service connects to remote order functions for data collection about shopping carts (including item prices for premium billing and compensation level, if necessary), and to parcel tracking tools, regardless of the selected provider (over 1,200 brands are covered so far), to ensure delivery commitments are met. A dashboard is also available to check the current status of shipments at any time.
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Indeed, due to the logic of parametric insurance, the initiation of a claim is automatic in cases of non-delivery exceeding one day past the scheduled deadline. In such scenarios, the insured company doesn't need to take any action: it will be compensated for 100% of the sale value (including shipping costs) in the next (monthly) compensation cycle. However, for damages, a claim must be filed by the end recipient, using a simplified form accompanied by a photo.
Thus, Anansi offers three major advantages to merchants: comprehensive coverage of transport risks, far surpassing the minimal contractual lump-sum compensations of carriers; total transparency on some incidents (and a quick, user-friendly procedure for others); and a drastic reduction, or even elimination, of the administrative formalities for reporting, allowing for almost instant resolution. This might be one of the first instances where the use of the parametric model enables the creation of a novel product.
