TOKYO -- Sompo Japan Nipponkoa Insurance plans to introduce, by the end of March 2020 at the earliest, a flood insurance policy for businesses that pays out the same day that sensors detect a disaster.
The Japanese insurer worked with disaster-prevention researchers at Kyoto University to develop a sensor system that uses internet of things technology. The new policy pays out once the sensors detect a specified degree of flooding.
The policy will offer fixed premiums and payouts. Payment will be made if the insured building is flooded and a sensor detects the presence of water.
Sompo Japan believes there is a market in the country for such quick-response policies. Japan has suffered many floods in recent years, such as that caused by Typhoon Hagibis in October.
The sensor system determines the degree of flooding at ground level. The low-cost sensors are designed specifically for insurance purposes and cost about 100,000 yen ($920) each, about one-tenth that of existing devices.
Sompo Japan's policy is the first offered by a major Japanese insurer to promise payouts on the day of a disaster. Typically such payouts take at least a month.
The company envisions a system in which payouts happen as soon as specified conditions are met. It also plans to team up with weather information provider Weathernews to collect disaster data from the sensor system, aiming to use it to provide disaster forecasts for policyholders.
Sompo Japan plans to set the annual premium at 2% to 4% of the amount of coverage. It hopes the new product will generate premium revenue of 5 billion yen within five years.