Why the parametric insurance market grew in 2023 - The Parametric Post
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Thought for the day… why the parametric insurance market grew in 2023
Privately owned insurance companies don’t often release specific details about how their products are performing, but we’ve recently seen a few statistics that hint at the growth in parametric insurance transactions in 2023.
In a recent interview, Amwins’ Executive Vice President of Alternative Risk says the number of parametric submissions from the broker increased by 500% this year. Meanwhile, the proportion of those submissions that led to policies being issued tripled. Brazil-based insurer Newe, which received $5.3 million USD investment in January to expand its parametric product range, expects parametric to make up between 2.5% and 5% of its overall business at the end of this year, an increase of 900%.
These figures show that a proven way for insurers and brokers to grow their businesses is by investing in designing parametric solutions for their clients, usually to cover risks not included in traditional policies. It also reflects a wider trend of more organisations purchasing parametric insurance. Munich Re recently surveyed its LinkedIn followers—out of more than 200 respondents, 18% said they used parametric insurance to mitigate the effects of extreme weather and natural catastrophes.
The understanding of parametric insurance is going up, while examples of successful pay-outs help build trust that the solution works. WTW writes in its Insurance Marketplace Realities 2024 report that many North American parametric products paid claims in 2023, which are likely to drive some premium increases in 2024. We’re aware of parametric claims paid on every continent this year—with one example from Colombia in this week’s Parametric Post.
There’s still room for the awareness of parametric insurance to grow, especially beyond the natural catastrophe examples which are most prominent. This issue features news about parametric insurance for supply chains and InsTech’s upcoming research reports feature examples of coverage for wildfire and non-damage business interruption risks. One way to make sure your colleagues are aware of all the ways parametric can help their clients is to share the Parametric Post with them—the only newsletter with focused, relevant updates on parametric insurance transactions and market insights.
Climate ? Carbon ? InsTech podcast
Arbol’s Co-founder & CEO Sid Jha joins InsTech’s Henry Gale on podcast episode 274 to discuss use cases of parametric for sectors including renewable energy and agriculture, a new product to help corporates understand their exposure to climate risks and the importance of data in the carbon markets.
Business interruption ? InsTech poll
Dozens of events in recent years have caused billions of dollars in non-damage business interruption (NDBI) losses. Around 50 of you have already responded to our poll about which sources of NDBI risk organisations are addressing with parametric solutions today. Find out the results so far and join the conversation on LinkedIn.
In the news...
Pacific ? Cyclone
New Zealand-based insurer Tower Insurance will use CelsiusPro’s platform to offer its parametric cyclone insurance product in the Pacific region. Tower piloted the product in...
Colombia ? Agriculture ? InsTech podcast
Technology company Raincoat, which designs and operates parametric disaster insurance programmes at scale around the world, has processed pay-outs for...
UK ? Climate
Arbol has launched an MGA in the UK to serve the international insurance market. The new MGA offers parametric insurance for the agriculture, renewable energy and...
Supply chain ? Business interruption ? Embedded
Otonomi, an MGA which offers parametric coverage for air cargo delays, has partnered with RedKik to embed its insurance product into the online systems used by...
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Cyclone
There are two common approaches to structuring parametric insurance for tropical cyclones: ‘cat in the circle’ and ‘wind speed at location’. Reask’s video explains the two...
UK ? Energy
WTW’s Power Market Review 2023 includes an article from Julian Roberts, Managing Director, Risk & Analytics (Alternative Risk Transfer Solutions), discussing how...
COP28
Ahead of the COP28 climate conference, The University of Cambridge Institute for Sustainability Leadership has published a report, in partnership with Howden, setting out how parametric risk transfer could...
UK ? Supply chain
MGA Anansi has secured capacity from insurers Tokio Marine HCC, Liberty Mutual and Arch Insurance for its parametric goods-in-transit insurance for large retailers. Anansi’s solution triggers pay-outs automatically if...
Pacific
The United Nations Capital Development Fund (UNCDF) runs a parametric insurance programme, in partnership with Howden, covering vulnerable populations in the Pacific against...
Niue ? Cyclone
The government of Niue has purchased parametric tropical cyclone insurance from the Pacific Catastrophe Risk Insurance Company (PCRIC), a...
UK ? Humanitarian aid
The UK government has published a white paper setting out its new international development strategy. It argues that pre-agreed finance mechanisms, such as parametric insurance, are...
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CEO at Instech - insights from and for a network of 25,000 people driving innovation in insurance and risk management around the world. Podcast host. Board advisor.
12 个月Our goal is "if it's not in the Parametric Post it didn't happen" - this is our offering to the world of all that you need to know about the companies coming together to offer insurance that wouldn't have been there without parametric insurance. A reminder that this topic is not just an interesting intellectual exercise - it's about helping companies and people get back on their feet after a loss.
CEO and Co-Founder at Otonomi
1 年Thanks for sharing Henry Gale! Otonomi's takeaways: 1) Material improvement in access to quality data, 2) Cost-effective transactional models, and 3) Seamless connectivity within customer purchase path powered by API
Henry Gale as always thanks for including us in #ParametricPost. ??
Executive Chairman of InsTech
1 年For the adoption of parametric insurance to really take off will require the brokers to fully embrace the model. They hold the key to distribution, but also see so many opportunities that cannot easily be covered with traditional risk transfer approaches, but could get limited cover through creative use of parametric insurance. Something is usually better than nothing.
CEO @ HD Rain, PhD in Atmospheric Sciences | Insurance, Startup & Innovation
1 年Camila Marjolaine 500% Up! And 2024 will be insane ??