What is Parametric Insurance?
Parametric solutions are rapidly growing as it can enhance traditional liability policies. Parametric coverage is triggered when a pre-agreed metric or parameter that is easy to determine is met upon the occurrence of a specific event. A pre-agreed payment is then paid upon the incident date. It is important to note that claims are not paid due to an incurred loss, but are paid due to a triggering event.
What does Parametric Insurance cover?
Ultimately, parametrics can cover almost anything. It is a matter of deciding the specific event, the triggered metric and the compensation amount. As payment is made due to an event occurring rather than damage incurred, there is no definite description of coverage per-se. However, any agreed terms will be written in the contract and any misunderstandings for both parties can be prevented. Moreover, to quanitfy it as insurance, the maximum payout may not exceed the client's actual losses.
What are the advantages of Parametric Insurance?
Who needs Parametric Insurance?
How much does a Parametric Insurance policy cost?