Introduction to Parametric Solutions

Parametric (Re)insurance is a strategic tool for the mitigation of natural catastrophe and weather risk.

Almost as soon as human societies began to develop and interconnect, (re)insurance was developed to provide cover for goods and trade. Throughout the centuries, (re)insurance products have evolved to become increasingly sophisticated. In recent years, the rise of modelling capability, product innovation and data availability have led to the development of solutions with an augmented range of perils and exposures.
What if the (re)insurance industry could provide cover for previously uninsurable risks, in any part of the world and with fast and transparent payouts? While the novel characteristics of parametric products are progressively making them a staple of modern (re)insurance, they are often surrounded by misconceptions that make them appear more complex than they really are. In this article, we describe the main concepts of parametric products and explore their areas of application.





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