Pairing parametrics, property indemnity insurance
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Parametric insurance has been greatly enabled by new data sources for indexes and can be used in tandem with traditional indemnity insurance, particularly as property indemnity markets show rate firmness, according to a panel of industry executives.
The property catastrophe market has been challenged “for quite some time,” and reinsurance is not as readily available as it used to be, Daniel Vetter, New York-based head, North America, for Descartes Insurance Solutions Inc., said during a Monday session at Riskworld, the Risk & Insurance Management Society Inc.’s annual meeting in Atlanta.
Mr. Vetter added that Descartes, which specializes in parametric insurance, has been seeing “a lot more activity” in the parametric risk space, including for so-called secondary perils such as tornado, hail and wildfire.
“Heading into this market cycle, with property the way it is, buyers and risk professionals are looking for alternatives. You might have to think about building a blended program that encompasses traditional indemnity and the parametric product,” said Brando Soto, Boston-based senior director, insurance and risk management, for Vertex Pharmaceuticals Inc.
“We should look at parametric and traditional as two parts of the same solution,” said London-based Tina Kirby, senior underwriter at Munich Re Markets, part of Munich Re Ltd. “Parametrics are one of the alternative ways of looking at risk. So much more data is available to us that we’re seeing a better and broader approach” of looking at risk.
“Around us and in low earth orbit, there is an increasing diversity of measurement” being taken by devices using optical and radar technologies, said Stephen Lathrope, London-based global head of insurance at Iceye, which uses synthetic aperture radar from a proprietary network of microsatellites to provide climate-related data to government agencies and private industry.
