Professional services firm Aon has launched a parametric insurance solution to mitigate and address losses from hurricane-related storm surges in the US.
Developed with flood expert Floodbase and insurer Swiss Re, the product can aid in bridging protection gaps in traditional insurance policies. This can also demand high deductibles or significant exclusions in policy wordings.
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The solution utilises a variety of meteorological data sources to assess hurricane-related storm surge inundation.
Furthermore, the parametric solution figures out payment based on water height, allowing policyholders to select the level of payout needed. Also, the proceeds can be used for any financial loss associated with the event, addressing a substantially broader set of exposures than traditional insurance covers.
Cole Mayer, head of parametric solutions at Aon, said: “Our data shows that storm surge can be a significant driver of losses for corporates, public entities and (re)insurers alike, so we developed this collaborative parametric solution to help bolster existing levels of cover. The solution can function either as a standalone product or in conjunction with traditional and non-traditional insurance policies, to ensure that clients can secure comprehensive protection for their U.S. storm surge exposures. It is part of a suite of Aon product offerings that together are helping to shape better decisions and more comprehensive sources of liquidity for clients.”
Martin Hotz, head parametric natural catastrophe at Swiss Re Corporate Solutions, said: “Parametric insurance provides a fast, flexible and transparent way to cover financial losses caused by natural catastrophes. A substantial part of hurricane-related losses can be the result of storm surge, and with this innovative solution we can better assist corporations in exposed areas with a rapidly-paying cover that fits their individual risk management strategies.”
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By GlobalDataAnnbjørg Medhaug, chief product and strategy officer at Floodbase, added: “The economic losses in the wake of major hurricanes are staggering. The inherent flexibility of this parametric storm surge product provides U.S. coastal corporations with a much-needed solution to address their specific protection gaps. Floodbase is delighted to have collaborated with Aon and Swiss Re Corporate Solutions to develop this solution, which demonstrates our continuous commitment to uniting technology and risk capital in order to bring more comprehensive protection to cedents.”
