The Demex Group, which provides insurance coverage for climate risk events, has raised $10.3 million from a Series A round and a previously closed simple agreement for future equity, or SAFE, funding round. The funding was led by San Francisco-based Congruent Ventures and included Moxxie Ventures, New York’s MetaProp, and existing investor Blue Bear Capital.
Washington, D.C.-based Demex was spun out of Munich Re, the world’s largest reinsurer, in 2020. It builds so-called parametric reinsurance products to cover losses from severe convective storms, such as tornadoes and thunderstorms, and other forms of climate change events. So far, the company has raised $28.5 million.
Compelling Value Proposition
“This is not the easiest time to raise new capital, but Demex’s unique ability to address a multi-billion-dollar global reinsurance problem combined with our demonstrated market traction over the past year made for a compelling investment case.,” Demex CEO and President Bill Clark, a 25-year tech veteran, said in a LinkedIn post.
“Growing losses from…storms are a critical problem for the insurance industry – challenging insurance companies’ annual earnings and balance sheet surpluses. We’re grateful to have investors who bring climate perspective, technology capabilities, a property mindset, and insurance experience to Demex,” said Clark, who is credited with shaping the analytic applications/business intelligence software category with IDC leading eventually to the creation of Hyperion Solutions,
In an interview to Risk and Insurance, Clark pointed out that climate risks have changed significantly. Consequently, secondary peril losses have accumulated to $1.1 trillion since 2000, and surpassed $880 billion in losses from primary perils. Still, traditional reinsurance either excludes or drastically limits secondary peril coverage which causes insurers to self-insure multiples of losses than they have historically, he pointed out.
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“The climate risks we’re talking about are much more frequent, occurring once every five or 10 years,” he said. “It’s not surprising that models designed for events happening once every 100 to 500 years are not going to be optimal for events occurring every five years.”
Demex’s key product RCR Re is described as the first purpose-built solution designed specifically for severe thunderstorms. In its first selling season, Demex has sold $65 million of RCR Re policies, notably in the Midwest.
New York-based MetaProp focuses on real estate technology, or PropTech, and has a portfolio of over 175 startups. Congruent Ventures is said to be one of the largest early-stage investors in climate solutions, while Blue Bear Capital, which operates in the United States and United Kingdom, invests in high-growth technology companies across energy, infrastructure, and climate.
