As a Risk Manager, Insurance agent or a company with unique risks and exposures, you may be hearing more and more about Parametric insurance. I myself have only heard the term Parametric Insurance over the last 5+ years or so, and if you know anything about me, you know that i take great pride in being a forward thinking insurance professional. And, while the term may be new to you, and not that old for me, for nearly 20 years, I have been creating and offering insurance solutions that are Parametric based in nature.
You see, Parametric insurance does not indemnify the actual loss, but it focuses on the trigger that makes it a loss. One of the earliest insurance products we offered back in the late 90’s and early 2000’s were weather related events, such as too much or too little snow. One insurance policy we worked on was how much snow would fall for a whole season at a Mountain Ski Resort, which ultimately became the trigger, and the payout would be based on a fixed amount of revenue loss due to the lack of snow at the mountain.
Another insurance program my team were fortunate to put together was for a film. There was a very visual location that the films director wanted, but they were concerned that the weather may shift and the film would have to shift locations at the last minute. And if you know anything about the making of a film, you know changing locations and logistically moving people around is a big deal. In this case, the trigger again would be lack of snow, but the payout would be based on the extra expense to relocate and shift the filming process around. both would be what we now call Parametric.
While, Parametric cover is not for everyone or everything, here at Elite Risk we have embraced these unique coverage opportunities at every turn. Going back to mid last year when we were asked to help launch a unique Active Shooter insurance program, that has both proactive training provided, and then reactive PR, and Extra expense paid out almost instantly, based on the coverage being activated with an active shooter situation.
Now, with our latest products targeting Catastrophic Property, both specifically to the Hemp Crop insurance space, and more broadly urban and rural communities, prone to Floods, Wildfires, Excessive Rain, Drought, etc. In these cases, the coverage has different trigger points, depending on what’s most important to our insured’s, their budgets and ultimately what they are trying to accomplish.
Lastly, we are currently working on several unique, low dollar, high volume solutions using Parametric cover across the board, so please stay tuned and let us know how we can help. The Article below should give you a bit more background to know if Parametric cover solutions might be right for your client.