CatX, a digital disaster and parametric risk exchange startup, has been accepted into the prestigious Y Combinator accelerator program to help it build capabilities and scale its growing business model.
CatX aspires to be “an exchange for catastrophic and parametric risks, integrating fast, automated risk origination and trading,” the company said.
Working with insurance or reinsurers, investors and buyers of direct insurance and risk transfer protection, CatX aims to develop an advanced suite of risk, solvency and capital management tools, supported by advanced modeling, machine learning and data analytics.
Y Combinator provides startups with a platform for education, knowledge sharing, and access to capital and expertise to fuel their growth, while taking a small stake in the startups they help accelerate.
Recall that insurance technology (insurtech) and insurance-linked securities (ILS) firm Ledger Investing is an alumnus of the Y Combinator program.
The company explained that CatX is developing systems to automatically initiate and simplify settlements, while also looking to enable catastrophe risks to be traded on a secondary basis.
At the core of the startup’s mission is to make catastrophe risk more affordable for investors, while helping protect buyers with easier access to capital market capacity, all within a modern, liquid trading environment.
We interviewed CatX founders Benedict Altier (who has worked in consulting, catastrophe risk analysis, and research) and Lucas Schneider (who has a background in capital markets, banking, and securitization product development).
Co-founder and CEO Benedict Altier told Artemis: “We are delighted to have been accepted into Y Combinator in the Summer 23 batch and to be part of the world’s leading startup accelerator program that has helped launch AirBnB, Stripe and Monzo .
“Through CatX, we hope to support the continued growth of the catastrophic risk market by enabling complex trading of various instruments across peak, secondary and emerging risks.
“Our focus now is to continue to strengthen our relationships with capital markets providers, in addition to supporting insurers’ ability to access flexibility at higher rates.”
Co-founder and CTO Lucas Schneider added: “Our platform supports new and existing ILS investors by offering a variety of models and leveraging new technologies such as machine learning and alternative datasets.
“CatX simplifies the entire issuance process, resulting in faster and more cost-effective issuance of insurance-related products.
“Through real-time risk modeling and standardized, simplified trading contracts, we facilitate secondary trading of catastrophic risks, helping to improve liquidity.”
This is a venture similar to others before it, and there are many risk exchange providers in the market today. While every business model is different, we believe it is healthy for more entrants to enter the space.
The more efforts are made to seek to digitize venture trading, making access to venture capital more direct, efficient and simple for protection buyers, while providing investors with liquid catastrophe risk tools, the more likely we will grow this market and find ways to shorten the time At the same time venture capital value chain.
As insurance risk capital is needed to address catastrophe and climate risk protection gaps, and that capital needs to be deployed as efficiently as possible, the more people working towards this goal, the better, as lowering the cost of capital could be critical in the coming decades. Year.
Linking capital to risk more directly therefore remains a worthy goal, and in the insurance and reinsurance space, making catastrophe risk tradable is a good place to start.
The Y Combinator program will help CatX grow and secure funding, but it still must overcome the same adoption hurdles that every other digital venture trading startup has faced to date.
Efforts to improve the way risk is traded are increasingly welcomed by the market, with many realizing that for the insurance market to truly realize its global potential and address protection gaps, improvements in the way risk is traded and the efficiency with which it is traded are needed. Link to different sources of capital.