Parametric insurance solutions

Parametric insurance solutions, which operate when an agreed set of parameters are reached rather than on the principle of indemnity, have existed for several years, but mainly in the reinsurance area. BIBA believes there is a growing role for them in the retail insurance space, especially where traditional insurance solutions are limited. For example, a parametric solution to provide a fixed amount of compensation in the event of a flood could help give some protection to businesses that cannot currently obtain cover, or they could fill the gap left by a large deductible.

Similarly, they could be used to pay a fixed sum to a business if footfall in a given period falls below a certain level, irrespective of cause: threat of terrorism, prolonged bad weather, or unexpected economic downturn.

 

BIBA COMMITMENTS

  • To work with insurance market stakeholders to widen the availability and variety of parametric products available to consumers and businesses. 
  • To produce guidance on available parametric solutions and how these can complement or enhance traditional insurance protection.

“Parametric insurance is at the forefront of using the data revolution to underwrite emerging mega trend risks, such as climate risk, or technology change. By using data to understand risks better we can offer wider coverages and design bespoke transactions for our clients. We look forward to working with BIBA as this option evolves.” 

PAUL RAMIZ  

Director, Aon UK Ltd

BIBA has more than 1,800 individually FCA regulated firms registered as members. 

With more than 600,000+ enquiries through our
Find Insurance services in the last year.