Swiss Re offers parametric coverage for water-level risks
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Swiss Re Corporate Solutions Ltd. on Tuesday launched a parametric insurance product that offers up to $50 million in coverage to European companies for financial losses resulting from high or low river levels.
An index-based product, FLOW covers lost revenue due to business interruption, or increased costs due to risk mitigation measures, the Swiss Re Ltd. unit said in a statement.
“The very dry and warm summer of 2018 left the water levels of most rivers in Europe at record lows,” said Thomas Keist, head marketing innovative risk solutions EMEA for Swiss Re said in the statement. “Decreased production volume and increased transportation costs were the consequence.”
The insurer devised an index formula that references water levels at various river gauges in Belgium, France, Germany, Italy, Luxembourg, the Netherlands, the Nordic countries, Portugal, Spain, Switzerland and the United Kingdom. The index tracks the water level exposure of a business related to revenues and costs, the statement said.
Unlike traditional insurance, the parametric-based coverage pays out a fixed amount based on the index, for example, each day the index remains below or above an amount agreed in the coverage, however, policyholders must confirm in writing that they have sustained a loss. Payouts are made within 21 days of an event that triggers coverage and policy terms are for up to three years, a Swiss Re spokeswoman said in an email.
