RIMS panel favours parametrics paired with traditional cover

Parametric insurance has been greatly enabled by new data sources for indices and can be used in tandem with traditional indemnity insurance, particularly as rates firm in property indemnity markets, 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, said Daniel Vetter, head of North America for Descartes Insurance Solutions, during a session at RIMS annual Riskworld conference in Atlanta.

Vetter added that Descartes, which specialises 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 programme that encompasses traditional indemnity and the parametric product,” said Brando Soto, senior director, insurance and risk management, for Vertex Pharmaceuticals.

“We should look at parametric and traditional as two parts of the same solution,” said Tina Kirby, senior underwriter at Munich Re Markets, part of Munich Re. “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, 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.

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