On 8th December 2021, Julian Ball, Head of Global Property and Political Violence, UIB, discusses parametric insurance and its uses, with Insure TV.

 

Parametric insurance (also called index-based insurance) refers to an insurance product that offers payouts based upon objective parameters such as precipitation or magnitude when losses arising from natural catastrophe such as flood or earthquake are hardly measurable as they are very broad, including direct and indirect ones. This tailor-made product offers transparent and pre-specified payouts at a faster speed, which makes it more suitable for catastrophic natural events.

Index insurance has recently drawn attention as it can close the protection gap by providing coverages for infectious disease risks (e.g., COVID-19), cyber risks, and terrorist risks whose losses have been difficult to measure under traditional indemnity insurance.