Madison startup Understory enters weather insurance industry

Madison-based startup Understory has moved into the insurance business with “Auto-Hail Safe,” an insurance policy for car dealerships who incur hefty costs when their unprotected lots are struck by hail storms.

Now on its 7th year in business, Understory manufactures weather sensors that are placed in strip malls, offices, schools and churchs to collect hyper-local weather data. The company then analyzes data on historical, current and forecasted weather events to provide insights and early risk detection.

Understory was previously on a path to building more weather centers across the globe, but are now using their technology and five years of data collection to build innovative insurance policy packages.

“In the past, Understory has been selling data and software to companies to help their operations,” said Understory chief executive officer Alex Kubicek. “Now we’re pivoting into this new space where our technology directly supports an entire insurance ecosystem.”

According to the National Oceanic and Atmospheric Administration, more than 4,600 destructive hailstorms hit the United States in 2018 alone, resulting in more than $8 billion of damage.

Understory will install and maintain a rooftop dot sensor on each policy holder’s dealership to provide weather measurements. When hail reaches the conditions agreed upon in the policy, the sensor will activate claims to the insured so, auto dealers won’t need to file paper work, according to a press release.

“That claims process happens instantaneously based on our data and then the payout begins processing in about 1 to 2 weeks,” Kubicek said.

Each dot sensor collects 125,000 measurements per second, including but not limited to hail, wind, rain temperature, air pressure, humidity and solar radiation. The data is then uploaded wirelessly from each of the sensors, which are solar-powered.

“We’ve had centers on three different continents collecting over 250 hail storms between them,” Kubicek said. “That’s really given us this DNA of understanding how hail storms work and the ability to price out this historical risk more than anyone else on the planet.”

Understory has partnered with MSI GuaranteedWeather, an internal weather risk manager and global reinsurer. Auto-Hail Safe will be sold with MSI GuaranteedWeather and through insurance brokers.

“Understory is introducing a paradigm shift to the insurance industry,” Kubicek said. “Our precision sensors are the gold-standard of ground-truth weather detection. They enable innovative products and fulfill the promise of insurance digitization.”

Weather insurance for auto dealers is just the beginning of Understory’s entrance into the insurance market. Understory’s sensors collect data for rain, wind and hail so, the company plans to offer insurance in the agricultural sector as well as for urban infrastructure, Kubicek said.