The Parametric Post - Issue 76
The Parametric Post, the only newsletter dedicated to parametric insurance.
You can sign up for free here.
Thought for the day… don’t blame the broker
For a number of years, one of the reasons given for the relatively slow growth in parametric insurance was the difficulties of distribution – or to put that in a language non-insurance people speak – the ability and willingness to sell parametric insurance to retail or small business buyers. Insurance brokers have proved remarkedly resilient through the Insurtech years when some people were forecasting their demise as we all moved to robo-advisors. Well, it turns out that for all but the simplest insurance coverage we still need our human in the loop helping us figure out a solution. Parametric insurance itself has evolved and found the greatest success in providing cover where traditional insurance is not available or is prohibitively expensive. Whilst it’s true that the complexity and basis risk (the possibility of not getting paid for a loss) was a barrier in the earlier days, regular readers of the Parametric Post will have noticed an increasing number of payouts from parametric products in the last year or so, reflecting the large numbers of protections in place. The brokers have had an essential role to play in supporting parametric solutions and whilst there is still some way to go until the potential for parametric is fully realised, we can no longer blame the brokers for the speed of progress.
And of course, the other thing that brokers know how to do well is to bring together their clients and insurers to get to know each other better and reflect on the business needs of the day in an informal and relaxing setting. We’re delighted, therefore, to have the support of Miller for our event on 12 November. Details below.
InsTech event
Our upcoming networking event is hosted by InsTech and Miller’s parametric team. Together we will explore the role of specialist brokers in expanding the parametric insurance market by simplifying products and educating clients. The session will focus on how dedicated broker teams can improve accessibility, facilitate collaboration among industry stakeholders and unlock the potential of parametric solutions for risk management.
In the news…
California ? Flood
Amwins and Floodbase have launched a parametric insurance programme for California municipalities to cover damages from atmospheric river flooding, in which concentrated moisture bands cause intense rainfall. The programme uses Floodbase’s monitoring to trigger payouts based on flood severity, providing funds for emergency needs, infrastructure repairs and revenue losses. With annual damages from atmospheric river flooding exceeding $1 billion USD, the programme offers governments an added financial resource against rising flood risks.
US ? Agriculture
AIR Parametric, in partnership with Guy Carpenter and Liberty Mutual Re, has introduced Milkshake, a parametric insurance product designed to protect US dairy producers against heat stress impacts on livestock. The product uses weather data and machine learning to set specific triggers based on the location. This product aims to address coverage gaps in the agricultural sector related to extreme temperature fluctuations affecting milk production. Expansion plans include additional distribution across the US and globally in other livestock regions.
West Africa ? Drought ? Pandemic
African Risk Capacity Ltd. (ARC) and Munich Re have partnered with the West African Development Bank (BOAD) to support a disaster-adapted loan scheme with parametric insurance and reinsurance. The pilot, covering over $350 million USD in loans, protects borrowers in Benin, C?te d’Ivoire, Senegal and Togo against natural and health disasters like droughts and pandemics. The parametric cover activates upon predefined triggers, temporarily lifting repayment obligations and providing financial relief without affecting the loan agreements.
Pacific ? Climate ? Earthquake
Lloyd’s has partnered with the United Nations Capital Development Fund (UNCDF) to establish a Global Disaster Resilience Vehicle, aiming to support financial resilience in climate-vulnerable Small Island Developing States (SIDS) in the Pacific. Developed with Aon and supported by Lloyd’s Disaster Risk Facility, the initiative offers parametric insurance policies to provide payouts based on disaster severity, backed by indemnity-based reinsurance. Initially covering Fiji, Papua New Guinea and Samoa, the vehicle addresses natural perils such as cyclones, earthquakes, and floods. Lloyd’s and UNCDF plan to replicate this model in other vulnerable regions like the Caribbean, Asia and Africa.
Aviva Canada introduces parametric insurance platform
Canada ? Weather
Aviva Canada has launched a parametric insurance platform to help businesses and municipalities manage financial impacts from adverse weather. The platform offers coverage based on predefined triggers, allowing clients to select limits, deductibles and weather thresholds. The platform currently includes coverage for rain days, rain seasons, frost, cold and heat, with plans to expand to wind and solar indices.
REVO partners with Paradigmix for BI coverage
Business interruption
REVO Insurance has partnered with management consulting firm Paradigmix to integrate parametric insurance solutions into services for manufacturing companies and healthcare facilities. The collaboration aims to cover revenue shortfalls caused by business interruptions. Paradigmix will identify triggering events, such as equipment failures, which will activate REVO’s parametric coverage for loss of turnover.
Blink Parametric expands travel insurance solutions
Europe ? Travel
Blink Parametric has partnered with Travel Insurance Saver in the UK and Berlin Direkt Versicherung in Germany to expand its parametric travel disruption solutions. The partnerships offer policyholders coverage for flight delays and lost luggage, providing options such as lounge access or immediate cash payouts.
领英推荐
Acorn Re raises target to $450m for earthquake cat bond
US ? Earthquake ? Catastrophe bond
The Acorn Re Ltd. (Series 2024-1) parametric earthquake catastrophe bond issuance has increased its target size to $450 million USD, with two tranches now ranging from $200 million to $225 million USD each. This bond, led by Hannover Re, provides multi-year per-occurrence coverage for Oak Tree Assurance, Kaiser Permanente’s workers’ compensation captive, and other Hannover Re reinsureds on the US West Coast.
Adaptive Insurance launches with GridProtect outage coverage
US ? Climate
Adaptive Insurance, a parametric startup from climate tech incubator Montauk Climate, has launched its initial product, GridProtect, which offers coverage for power outages. The product uses AI and climate data to provide payouts for short-duration outages. With power disruptions impacting 15 million US businesses each year, GridProtect aims to address coverage gaps.
Fiji’s central bank expands parametric micro-insurance
Pacific ? Climate
The Reserve Bank of Fiji (RBF) has partnered with SUN Insurance, Tower Insurance and the InsuResilience Solutions Fund to scale up parametric micro-insurance in Fiji. The collaboration aims to provide affordable coverage for low- and middle-income households and small businesses against climate-related risks. The initiative is part of the broader Pacific Insurance and Climate Adaptation Programme (PICAP), enhancing financial resilience against extreme weather events in Pacific communities.
AXA Climate renews parametric partnerships
Flood ? Cyclone
AXA Climate has renewed its parametric insurance partnerships in Mexico and the Philippines to protect ecosystems and local communities. In Mexico, the collaboration with AXA México and ClimateSeed supports the San Crisanto mangroves, which serve as carbon sinks and coastal flood defences, by providing financial aid for restoration and infrastructure repair after hurricanes. In the Philippines, the partnership with Blue Alliance and Humanity Insured extends parametric coverage to 88 Marine Protected Areas, securing over 90,000 hectares of coral reefs and supporting 12,000 fishers. The insurance triggers payouts when cyclones strike, enabling recovery efforts such as coral restoration and debris cleanup, while an impact loan facility promotes sustainable businesses focused on reef conservation.
Land Bank and CelsiusPro launch drought insurance pilot
South Africa ? Drought? ? Agriculture
Land Bank Insurance Company (LBIC) has partnered with climate risk specialist CelsiusPro to pilot index-based drought insurance targeting smallholder farmers in South Africa. The two-year pilot, supported by the Natural Disaster Fund, aims to provide coverage for crop and livestock farmers in five provinces. The index insurance triggers payouts based on objective measures like rainfall or soil moisture levels. The initiative aims to enhance climate resilience and support over 250,000 smallholder farmers in the region.
California introduces community-based flood insurance
California ? Flood
The California Department of Insurance (CDI) has launched the state’s first community-based flood insurance programme, targeting residents in Isleton, a small town in a 100-year floodplain. The programme offers payouts if flood waters reach a predetermined level, supplementing existing insurance policies. Funded by a $200,000 USD grant over two years, the initiative aims to help residents cover evacuation costs and property repairs. The programme is managed by Isleton’s Delta Geologic Hazard Abatement District (Delta GHAD) and represents a shift towards non-structural flood risk management approaches. CDI plans to explore expanding this model to other vulnerable communities.
ARC sells Ghana its first parametric drought insurance policy
Africa ? Drought? ? Agriculture
African Risk Capacity Ltd. (ARC Ltd.) has provided Ghana with its first sovereign parametric drought insurance policy, aimed at protecting the country’s agricultural sector. The policy, financed with $1 million USD by KfW Development Bank and the Global Shield Solutions Platform (GSSP), is designed to safeguard food security and stabilise agriculture during drought events.
Future opportunities?
Do you represent an organisation looking for parametric insurance? The Parametric Post reaches parametric specialists across the global (re)insurance market. Contact us out at [email protected] to discuss how we can help you list your requirements.
Please note:
We are not a broker or professional advisor. InsTech, in partnership with ParaRisk (a joint initiative by 20 Twenty Search and Cerchia), makes paid introductions across the parametric insurance market, including brokers, (re)insurers, MGAs and data providers, to help facilitate transactions and grow the market for everyone.
Find out what you’ve missed…
Sign up?here to receive the latest news, stories and insights on parametric insurance.