What is parametric insurance?
Parametric insurance pays a pre agreed amount when a measurable event crosses an agreed threshold, rather than reimbursing an assessed loss.
Because the trigger is data, not a claim, settlement is fast, objective and transparent.
Parametric versus traditional cover
| Traditional indemnity | Parametric | |
|---|---|---|
| What pays out | An assessed loss after the event | A set amount when the trigger is met |
| How it is proven | Loss adjusting and proof of loss | Independent data confirms the trigger |
| Speed | Weeks to months | Days |
| Certainty | Subject to dispute and exclusions | Terms agreed in the contract upfront |
| Best for | Conventional, easily assessed losses | Fast moving, data measurable risks |
Four steps
Define the trigger
We agree the event and threshold that matter, for example rainfall below a level or wind above a speed, measured by an independent source.
Set the payout
You choose the limit and structure. The contract states exactly what is paid at each trigger level.
The event happens
Independent data confirms the threshold was crossed. There is nothing to prove and nothing to adjust.
You get paid
The agreed amount is settled in days, free for you to use however the situation needs.
Triggers and data
A parametric cover is only as good as the data behind it. We use independent third party sources and grade every one before it goes into a structure. Read more on why independent data matters.
Where triggers come from
- Recognised index and industry loss data
- Government and meteorological records
- Satellite and remote sensing data
- Physical parameter measurements
How we validate it
- Is the source public, methodical and independent
- How long and complete is the historical series
- What is the risk of publication stopping during the policy
- How is data collected, and is there any pre processing
Basis risk, explained honestly
Basis risk is the gap between what the trigger measures and what you actually experience. It is the one real trade off in parametric, and we treat it openly. We assess it at the structuring stage, design triggers that track your exposure closely, and tell you where a parametric structure is and is not the right tool. Credibility comes from process, not presentation.
When parametric fits
Fast moving, data measurable risks where speed of payment matters: weather and catastrophe exposure, revenue and operational shocks, supply chain and commodity risk, and markets where conventional cover is thin.
When it does not
Losses that cannot be tied to an independent measure, or where an indemnity settlement genuinely suits the exposure better. We will say so.
Common questions
How quickly does a parametric policy pay?
Once the independent data confirms the trigger, settlement is typically a matter of days, because there is no loss adjusting to complete.
What can be used as a trigger?
Any measurable parameter from a credible independent source, such as wind speed, rainfall, temperature, an earthquake reading or a recognised industry loss index.
Is the payout restricted to repairing a specific loss?
No. The agreed amount is yours to deploy where the situation needs it, from operating costs to recovery.
Who is parametric cover for?
Corporates with exposed revenue, lenders, governments, producers and reinsurance markets looking for diversifying, data driven risk.