Colorado Springs firm tests hail detection device for major insurer | Content reserved for subscribers
A Colorado Springs-based startup is waiting for the skies to open and hail to fall.
Hailios will test its hail monitoring device in up to 20 neighborhoods in Colorado Springs, Denver and Dallas with a major insurer who will use it to offer a new type of hail insurance. The startup developed the sensor to measure hail size and storm duration for a new type of insurance, called “parametric” coverage, which bases payouts on hail size and storm duration. .
Hailios founder and CEO Lucas Schiff declined to name the insurer, but said the test was designed to be a “proof of concept” for parametric coverage to show its feasibility in helping combat the rise skyrocketing hail premiums.
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The test will largely be conducted at car dealerships and other commercial buildings that typically experience significant losses during large hailstorms, including the Motor City area southwest of downtown Colorado Springs and Powers Autopark. near Woodmen Road and Powers Boulevard, Schiff said. More frequent and severe hailstorms have prompted some local dealerships as well as car rental companies at the Colorado Springs airport to build parking lots or shelters to protect vehicles from hail.
“Insurance premiums for homeowners and commercial policyholders have skyrocketed due to lack of hailstorm data,” Schiff said. “Insurance companies pay claims (with little verification) for fear of losing customers, which dramatically increased losses and ultimately rates. This led to this new type of coverage called parametric insurance which pays if the hail reaches a certain size.”
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Schiff said he is positioning Hailios as an “unbiased third-party hail data provider” that insurers and policyholders can trust. The 16-pound solar-powered device is light and small enough that it can be attached to the shingles of a roof or mounted on a pole to measure hail in an agricultural field. The sensor, available with an annual subscription of around $1,500, measures hail size by recording the vibrations of hail striking its glass surface and calculating the kinetic energy produced by the impact. It sends data via a wireless connection directly to insurers.
Hailios, which has 11 employees, is preparing for the growth that could come if the test passes. The company raised $2.7 million last year from wealthy investors called “angels,” who are often the first outside backers for early-stage startups. Hailios has added nearly $50,000 in recent weeks in a $1.07 million stock offering on a crowdfunding platform called StartEngine that takes investments as small as $250.
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“What that could mean is that this device could pave the way for Colorado Springs to be one of the first cities in the country to have this low-cost solution for homeowner policies,” Schiff said. “If this test goes well, we will have to figure out how to do it on a much larger scale and roll it out with the majority of major insurers. In three to five years, my goal is for Hailios to be the dominant provider worldwide. hail data.”
Schiff believes the market for the company’s hail-measuring device, called Eyewitness, is huge – hail causes $36 billion a year in damage to agricultural crops, vehicles, homes and commercial buildings. According to the Parker-based Rocky Mountain Insurance Information Association, the three biggest insurance disasters in Colorado are all hailstorms, ahead of the East Troublesome, Waldo Canyon and Black Forest fires.
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Hailios already works with 18 major insurers, including SwissRe, Hailsure, Berkshire Hathaway Specialty Insurance, AXA Climate, AON, Generali and Descartes in the United States, Canada and Europe. In addition to the upcoming test in Colorado Springs and Denver, the Eyewitness device is also being tested in Australia and New Zealand to measure hail for parametric coverage on kiwifruit, mango and macadamia nut farms. Around 200 Eyewitness devices are in use worldwide.
Richard Duer, CEO of South Carolina-based Hailsure, said the company has been using the devices for about 2½ years, primarily with car dealerships, apartment complexes and golf courses for insurance policies. parametric hail tests that it administers for major insurance companies. Duer, who lives in Colorado Springs, was looking for a hail measuring device and was happy to find Hailios in the same town.
“We have found this product to be invaluable. It is important to know what type of weather has been in a specific location and hail is very localized – damage can be very different in properties across the street “, Duer said. “It’s the only product in the world accurate enough for this type of coverage. It’s accepted by the five largest insurance companies in the world.”
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Schiff is a serial entrepreneur – he started four other companies before Hailios. Three of the companies still exist – a commercial lighting control company expanded to measure indoor air quality and other environmental sensing technologies, a solar lighting company was sold, and Schiff still operates a company that helps entrepreneurs turn their ideas into marketable products. Another lighting control company closed because it was unable to obtain financing.
Schiff launched Hailios nearly five years ago when he was CEO and founder of Nimbus 9, the lighting control company. He started Hailios with Carsten Neufing, who Schiff befriended while working for Neufing’s startup Fast Video Security nearly 20 years ago.
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“Carsten contacted me six years ago about a friend in the roofing business who was frustrated that he didn’t have data on the impact of hail on buildings,” Schiff said. “I had information from Nimbus but realized this idea needed to be on its own platform (a separate company) so I left Nimbus and took on this idea full time.” It was in partnership with Neufing, which is Hailios’ chief technology officer.
The Eyewitness device technology was developed by researchers at Saarland University in Germany and adapted by Hailios to make the device smaller, lighter and more accurate in hail detection. Schiff saw the insurance industry as the target customer – a customer who needed an unbiased source of hailstorm data. The device is now in its fifth generation and is a fraction of the weight and size of the original version.
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Hailos first tested his device in 2018, chasing severe thunderstorms across Nebraska and Colorado before hitting the mother lode with a monster storm that hit Fountain. The storm pounded the city with tennis-ball-sized hail that resulted in 84,500 auto and homeowner claims totaling more than $350 million, then the sixth most damaging storm in Colorado’s history, according to the Rocky Mountain Insurance Information Association.
“We were in our new car and had to set up the station with a GoPro camera so we could validate the sensor technology during a real hailstorm,” Schiff said. “Fortunately, we were able to set it up and move it to a safe location before the storm arrived. The results of this test led to the current design of our sensor, which can also measure wind speed, temperature, precipitation, lightning and flooding.”
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The company is developing artificial intelligence that would allow it to use sensors to measure hail in a larger area, such as an entire neighborhood, rather than a single house. Schiff said the technology could be key to how the company can expand the use of the sensor on a much larger scale.