Parametric Insurance

Parametric insurance solutions provide coverage based on the occurrence of a specific event. Unlike traditional insurance policies, parametric solutions are triggered when pre-defined event parameters are met or exceeded. These solutions are not meant to replace traditional insurance programs but rather to complement them and provide additional protection in specific areas.

Gallagher can advise on industries where parametric policies can be used, particularly those that are exposed to risks that can be easily measured and quantified. They can be used for deductible buy-down, additional capacity, and coverage for self-insured or uninsured perils such as non-damage business interruption.

Parametric insurance solutions are becoming increasingly popular as they offer an additional line of defense and help minimise financial liability. These solutions can quickly restore operations after an incident and fill protection gaps by responding according to an index and pre-agreed payout scale, rather than compensating based on actual harm or loss.

Coverage for a wide range of risks

Parametric coverage includes:

• Cyclone, earthquake, flood, wildfire, hail
• Agricultural yield, frost, excess rain, drought
• Yield for solar, wind and hydropower
• Data and technology driven solutions

Our policies can be tailored to meet the specific needs of our clients, including coverage for non-damage business interruption and supply chain disruptions. They often have no deductibles, sub-limits, or broad exclusions, and claims can be paid remotely without manual adjustments.

Unlike traditional insurance, which aims to indemnify policyholders for their precise losses, parametric insurance policies respond based on the triggering of an external index. Once triggered, claims are settled according to a pre-agreed payout scale. This makes parametric policies a type of non-traditional insurance product.

Industry experience and global expertise

Parametric policies are particularly useful in situations where traditional insurance is not available for a specific peril or where traditional insurers can only provide limited coverage. By leveraging both our local and global capabilities, we will work with you to understand the impacts of a specific peril to your business to ensure you have the right coverage to protect you against loss or financial consequences.