Parametric newsletter
Change starts with dialogue.?
“Almost every conversation at some point has had an interjection about parametrics,” Nicky Payne, partner at McGill & Partners, told The Insurer TV at the Monte Carlo Rendez-Vous.?
Parametric solutions, which have been growing in popularity in the primary insurance market, are higher on the agenda than ever with buyers and sellers of reinsurance ahead of the January 2025 renewals.?
They are coming up in conversation partly because of the parametric market’s recent growth and the substantial capacity reinsurers and alternative capital are willing to deploy. But alternative risk transfer solutions are also relevant to many of the challenges facing the reinsurance market, from social inflation to earnings protection. There have even been discussions on using novel parametric triggers to reinsure political violence risks.?
While some index-based solutions had been a last resort for stressed cedants in the past, now companies are starting to approach parametric covers more strategically. If dialogue turns to deals at 1.1, it will be because parametric solutions were the most suitable tool for a particular exposure, complementing other indemnity-based reinsurance covers.?
One measure of increased demand for parametric reinsurance solutions is the increasing number of reinsurance brokers launching parametric practices. If you haven’t already read the first edition of Parametric Insurer, which includes an exclusive interview with the head of Juniper Re’s new parametric practice, you can download it here for free.??
From October onwards, only subscribers to The Insurer will continue to receive the monthly publication and retain unlimited access to all Parametric Insurer content. If you don’t have an active subscription and would like full access, contact our team ?
Parametric solutions in Asia-Pacific?
Gerry Lemcke, head of product management at Swiss Re Public Sector Solutions , writes about how Swiss Re designed the parametric insurance policy that paid out to women workers affected by heatwaves in India earlier this year.?
Super Typhoon Yagi ripped through the Philippines, China and Vietnam just over a week ago, with local media reporting that PICC paid parametric claims to aquaculture, sugarcane and rubber farms in Guangdong.?
Yagi also caused flooding in Myanmar, a country which had already suffered severe floods in recent months during its monsoon season. Parametric policies offered by the state-owned insurer Myanmar Insurance paid $5.8mn to farmers in relation to the earlier floods, the country’s finance minister confirmed.?
The parametric cyclone insurance product Tower Insurance offers in Fiji and Tonga launched a new IT platform powered by CelsiusPro to help individuals and small businesses access the coverage.?
Meanwhile, a farm in New South Wales, Australia, received a $237k payout after its parametric program with CelsiusPro was triggered by rainfall during its cotton harvest in May.?
Flight delay protection?
The adoption of parametric flight delay coverage is also growing internationally, having previously been available mostly to North American and European flyers.?
Collinson has partnered with National Australia Bank to provide flight disruption solutions to its credit card customers, while Blink Parametric’s partnership with Mapfre’s Mawdy has launched in Kenya with plans to expand across Sub-Saharan Africa.?
Insights from ReinsuranceMonth?
Parametric solutions are “attractive for clients”, Howden CEO David Howden told The Insurer’s Pre-Monte Carlo Forum in London, while Arch’s Maamoun Rajeh and Ark’s Ian Beaton also commented on the growth in parametric solutions.?
A panel hosted by The Insurer TV at the Monte Carlo Rendez-Vous agreed that there was a huge increase in discussions around parametric reinsurance covers ahead of the January renewals. McGill & Partners’ Nicky Payne, Descartes’ Kevin Dedieu and NormanMax’s Stuart Newcombe argued that parametric reinsurance is here to stay.? Watch the full panel here .
Robert Muir-Wood, chief research officer for insurance solutions at Moody’s , explained how social and economic inflation make parametric coverage appealing to the industry, while mulling different approaches to overcome issues with basis risk.?
Along with parametrics, other types of alternative risk transfer were also on the agenda in Monte Carlo. Guy Carpenter’s Laurent Rousseau told The Insurer that reinsurers are increasing their appetite for structured solutions as they seek to grow their portfolios.?
People moves?
Meanwhile Ryan Specialty has bolstered its alternative risk transfer unit by hiring Michael Albian as president, group captives.?
Gallagher Re has added Abdessamad El Angoudi, formerly of Liberty Mutual Re, to its parametric team, as El Angoudi also becomes head of agriculture EMEA.?
Demex , which provides parametric reinsurance solutions for severe convective storm risk, has added industry executives John DeMartini, Alastair Speare-Cole and Matthias Weber to its advisory board.?
Company news?
This comes after Congruent Ventures led a $10.25mn funding round for Demex. The company has bound $65mn in reinsurance coverage since launching its parametric severe convective storm offering.?
Speedwell Climate , one of the weather data providers used to settle parametric contracts, is set to be acquired by Helsinki-listed environmental measurement firm Vaisala.?
India-based WRMS , which specialises in parametric coverage for agriculture, is expanding its operations to Latin America, while Revo Insurance , the Italian insurer with a strategic focus on parametric solutions for SMEs, has obtained regulatory approval to open a branch in Spain.?
Parametric Insurer Conference & Awards 2024
Following the launch of Parametric Insurer, we'll be hosting the inaugural Parametric Insurer Conference and Awards on 30 October in London to bring together the fast-growing global parametric and alternative risk transfer market.
You can register for the conference for free here . For awards entries and table bookings, click here.
We'll be continuing our free parametric newsletter coverage on LinkedIn, however from October onwards, only subscribers to The Insurer will continue to receive the monthly publication and retain unlimited access to all Parametric Insurer content. If you don’t have an active subscription and would like full access, contact our team .