What is Parametric Insurance


Parametric Insurance is triggered by the “parameters of the event” such as wind speed for hurricanes, or ground shake for earthquakes. Because what is being underwritten is essentially the event itself, not the underlying insured asset(s), parametric insurance is able to cover exposures that are either below traditional insurance deductibles, or otherwise uninsurable. Some of the other benefits of parametric insurance are no monetary deductible, and a very rapid and streamlined claims process oftentimes resulting in claims payment and liquidity (without argument) in a matter of days following the natural catastrophe.

This type of coverage has been around for years, but generally only available to governments, insurance companies, and the largest corporates with the exposures and budget to spend millions of dollars. With new technology to reliably measure hurricane force winds, record levels of (re)insurance industry capital, and a growing appetite for a more complete risk transfer solution, these sophisticated risk transfer options are now available to middle market companies.

Our team work closely with the leading providers in this emerging marketplace and would welcome the opportunity to introduce the benefits of parametric insurance to your organization.