According to CEO Kossovsky, Steel City Re's reputational value index provides investors with consistent and high returns.

Steel City Re, based in Pittsburgh, Pennsylvania, is the only company globally to offer parametric reputation insurance solutions. These offerings leverage a reputational value index that, according to co-founder and CEO Nir Kossovsky, provides stable and higher returns for reinsurers and investors in insurance-linked securities (ILS).

Founded in 2007 with roots in reputation measurement dating back to 2001, Steel City Re transforms data from a commercial aggregator into synthetic reputational value measures using algorithms that exclude human bias. Currently, the company indexes reputation values for around 7,000 publicly traded firms weekly, focusing on ethics, innovation, safety, security, stability, and quality.

All insurance products offered by Steel City Re are based on its proprietary reputation value index. With rising interest in reputation insurance, Kossovsky explained how the index serves protection buyers while attracting reinsurers and ILS investors. He noted that reputation insurance, much like directors and officers (D&O) liability insurance decades ago, was initially underutilized due to concerns about signaling risk. However, changing attitudes and increasing awareness of reputation risk have driven growing demand.

The reputational value index measures intrinsic value based on forward-looking financial metrics and identifies risks by quantifying volatility. This system has allowed Steel City Re to create investment opportunities through arbitrage and develop innovative insurance solutions. For instance, the company launched the RepuStars Variety Corporate Reputation equity index (REPUVAR), calculated by S&P Global, featuring companies with high reputation values but relatively low stock prices.

Steel City Re’s parametric insurance solutions rely on these data-driven insights. By pricing risk with precision and offering stable returns, the company delivers attractive opportunities for reinsurers and ILS investors. Kossovsky highlighted three key benefits:

1. Stable returns due to lower loss variance and insights into individual company risks.
2. Higher returns enabled by precise pricing and dynamic risk adjustment.
3. Extended returns sustained through intellectual property-protected underwriting and pricing tools.

The rising demand for reputation insurance reflects broader trends, including heightened corporate governance challenges and growing personal accountability for board members. Recent events, such as the assassination of a corporate executive, and social pressures on ESG-related governance have intensified the urgency for reputation risk management.

Steel City Re’s solutions address these evolving risks through predictive analytics, business process modifications, and parametric insurance offerings. According to Kossovsky, parametric models are particularly well-suited for rapid responses to emerging risks, akin to how mRNA technology revolutionized vaccines. He believes parametric insurance could redefine the industry by providing swift, scalable solutions to unpredictable risks.

As companies and board members face increasing scrutiny from stakeholders, regulators, and investors, Steel City Re positions itself as a critical resource for managing reputation risks that D&O liability insurance cannot cover. The firm’s innovative approach ensures financial resilience and offers significant opportunities for insurers and investors alike.