Technology
Parsyl CEO: The Last Mile of Vaccine Delivery Is Where Insurance Matters Most

• Meg Green
• March 2021
• 

Ben Hubbard, chief executive officer of Parsyl, said the insurtech has aligned with Lloyd's and governments to help insure sensitive vaccines reach their destinations. “We have a solution that allows shippers to monitor and insure their sensitive cargo as it's being stored and shipped around the world. To do that, we use smart sensors that ride with the cargo and monitor the quality conditions.

“Then we use software and data analytics to understand where problems are happening and insights that can help shippers reduce their risk. We use that data as well to provide really strong insurance coverage and tailored insurance packages to those specialty shipments.”

Following is an edited transcript of Hubbard's interview with AM Best TV.

How did you get into insurance?

It wasn't a straight line for us. We started our company really with the sole mission of developing a better solution for understanding the quality conditions of vaccines as they're making their way to children in developing countries.

Those are obviously challenging supply chains. A vaccine makes its way thousands of miles across the world on its way to a child. When that child resides in a developing country in a remote setting, there's lots of opportunities for that supply chain to fail. Particularly when you're talking about cold chain vaccines, preserving that cold chain is really difficult.

I struggled in my previous life with those supply chains and got frustrated with the lack of really good solutions. We set out to develop that.

In the process, we started working with insurers because the data we collect on those quality conditions is very valuable to insurers to understand risk, to provide better insurance solutions to their customers, to pay claims faster, to reduce cost. As our value to the insurance industry became more clear and we became smarter, we started to see how actually we can fit in that insurance ecosystem.

Today, we're a Lloyd's cover holder. We just launched an insurance syndicate at Lloyd's to focus on vaccine distribution. Of course, in all of this, COVID-19 happened, which we didn't anticipate when we started this company. Obviously, vaccines and the distribution of them is particularly relevant to this current time.

How sensitive are the COVID-19 vaccines?

It varies by the product. I think everyone's learning a lot about vaccine cold chains now. We have some products that require ultra-cold chain, like the Pfizer-BioNTech product. We have a Moderna product that needs to be kept frozen. Then we have some, what I would call, more traditional cold chain vaccines. Those are vaccines that need to be kept between two and eight degrees centigrade, Johnson &Johnson vaccine and AstraZeneca vaccine.

Those tend to be the easier ones. Easier because distributing something cold everywhere is not easy, but certainly easier than ultra-cold chain. Every vaccine will have a role to play in vanquishing this virus. Certainly, some will be easier to distribute through weaker supply chains in developing countries than, say, in the United States or in the U.K.

You were involved in the Lloyd's Lab. Can you tell us how that helped you make the jump over to insurance?

It was good timing for both of us. Our 10 weeks at the Lloyd's Lab was really critical in the evolution of our company because it allowed us to really understand our value proposition much more clearly. We got to work alongside a half a dozen underwriters, leading cargo market syndicates, to start to figure out how we can design solutions.

It was actually that time that convinced us to pursue becoming a cover holder, which is a really big decision for us as a company. It's not something we certainly anticipated when we started. We're so glad we did it. But we couldn't have done it without that experience at the Lloyd's Lab.

It's led to a really productive and fruitful partnership with Lloyd's. I think Lloyd's is such an incredible place that mixes the old with the new. We're really honored to be part of the new, but leveraging the 300 years of history and capability that they bring.

You also have a unique relationship. You have a public-private partnership to insure the COVID-19 vaccines. Can you tell us about that and how that works?

We created something called the Global Health Risk Facility (GHRF). We did it alongside a number of partners. We have 14 different global reinsurers and insurance companies that are part of it, nine Lloyd's syndicates, another five reinsurers. We did it in close cooperation with Ascot Group, with Axa XL, with McGill and Partners, a number of other partners, and Lloyd's first and foremost.

What it allows us to do is share risk on what are higher risk distributions of these cold-sensitive vaccines. We're talking about not just a cold chain vaccine, but it's sending those to lower- and middle-income countries that tend to have weaker supply chains.

Half the world today lives in countries that we would consider to have weak supply chains. It's just as important that those people get vaccinated. We really do need insurance solutions that cover the world, not just the rich world.

This is something we saw as a problem before the pandemic. Obviously, the pandemic made this challenge even greater. It was really important that the insurance industry stepped up with a solution.

This is something we've been working on actually just before the pandemic. It was actually four months before COVID shut us down that [Lloyd's CEO] John Neal and I started talking about this. We brought it to market in December.

We've created a special syndicate called Syndicate 1796. It's named after the year that the British physician Edward Jenner discovered what would become the smallpox vaccine, which interestingly is the only virus that we've completely vanquished from the planet. A small inspiration for us.

That syndicate is actually backed by capital from the U.S. government, an agency called the U.S. International Development Finance Corp. They have lent capital into this syndicate. It will be used to back policies that are underwritten through the GHRF.

The syndicate will share 50% of the risk. Lloyd's markets will share the other 50% of the risk. It's that risk-sharing combined with the data and the insight and the visibility that we can offer through Parsyl and other sensor solutions that really allows these higher risk distributions to become insurable.

How does the vaccine go from the manufacturer to the end-user or receiver?

We tend to think of global vaccine distribution, the high level, two key segments of the supply chain. There's the first segment, which is going from the manufacturer to the port of entry in a country. That tends to be through air cargo. These are fast-moving products. They're shipped by air. They land at an airport. They clear customs. Then usually the custody of that product transfers to another party.

It's at that point that actually the risk increases significantly because now it's going to be distributed through a public health system. You've got varying degrees of supply chain quality.

That's actually, interestingly, where insurance usually stops. Typically, those goods coming into the country are insured. There's a market for being able to do that. Once that custody transfers and they're distributed within the country, there's often a lack of insurance and a weaker supply chain.

You really want insurance where that risk increases. That's been difficult to secure for some of the reasons I've mentioned, visibility, perceived risk, counterparty risk, you name it. We solve some of those problems with this Global Health Risk Facility. What it allows us to do is actually insure these higher risk cold chain vaccine distributions within a country and all the way down to the last mile.

Supply chain logisticians, health care workers can have confidence, one, that they're getting the data they need to determine whether the vaccine is potent and should be given to the patient, two, they've got peace of mind that that investment is protected. There's no doubt. If it's not OK, they set that aside. They can be made whole.

That's really the exciting thing. Regardless of whether it's vaccines or seafood, anything that's perishable, using this kind of granular sensor information, we can design coverages and solutions much further down the supply chain than was ever possible because we just didn't have this data.

If the device goes off that the vaccines were not maintained at the level that they were supposed to be, that's when the insurance would be triggered?

Absolutely. There's two levels. One is the person who needs to do something is notified. The health care worker understands that something's out of spec. They're actually given guidance through their mobile phone as to what to do.

Then there's an insurance process where the right insured parties are notified. Then that sets a course of claims process. We have a couple different products. Some, this would happen automatically, parametrically. Some that follow more of a traditional adjustment process. In either case, that process is faster and it's cheaper because we have the data we need to be able to make a decision, in insurance, a claims decision.