What is parametric insurance?
Parametric insurance is insurance that pays a pre-defined lump sum when an agreed trigger is met. For example, if flood water reaches a certain height or a storm records a certain windspeed. It has been around for 30 years, but it is mostly used by large corporations and governments.
What at the advantages of parametric insurance?
Parametric insurance does not need a burdensome claim experience. So, claims can be paid within seconds.
What triggers are used for parametric insurance?
Anything can be used as a trigger if it is objective and independent of the insurance company and the customer. Windspeed, water height, hours of sunshine, and flight delays are all currently protected by parametric insurance.
Is parametric insurance going to replace normal insurance?
We see parametric insurance as complimentary not as an alternative. Traditional insurance is perfect for covering uncertain losses when the insurer can take time to calculate those losses. Parametric insurance is good for filling in the gaps and helping with short term losses.
What is predictive parametric insurance?
Predictive Parametric insurance is what we call it when we make the trigger based on a forecast or a prediction. For example, we pay when there is a 50% chance of a Hurricane to give policy holders funds before the event.