Aon, Floodbase, And Swiss Re Introduce Parametric Insurance For Storm Surge
Aon, Floodbase, and Swiss Re have launched a parametric insurance product aimed at providing coverage for hurricane-related storm surges. This collaborative solution leverages meteorological data to evaluate risks, with an emphasis on enhancing existing coverage. It can function as a standalone product or integrate with traditional policies, addressing significant financial losses from recent hurricanes.
Aon, Floodbase, and Swiss Re have collaboratively introduced a parametric insurance product specifically tailored for hurricane-related storm surge. This innovative solution utilizes meteorological data to evaluate the risks associated with storm surge, which can lead to considerable financial losses affecting corporations and public entities. Cole Mayer, who oversees parametric solutions at Aon, emphasized that this offering enhances existing insurance coverage, providing clients with a comprehensive approach to managing their storm surge risks.
This product can be adopted as a standalone insurance or integrated with traditional and non-traditional policies, ensuring that clients have robust protection against storm surge threats in the U.S. Recent analyses revealed that Hurricanes Helene and Milton were among the costliest events for insurers in 2024, with significant storm surge impacts reported throughout Florida.
Martin Hotz, head of parametric natural catastrophe at Swiss Re Corporate Solutions, highlighted the speed and transparency of parametric insurance in addressing financial losses from natural disasters. He noted that storm surge is a major contributor to hurricane-related losses and praised the new solution for its capacity to align with companies’ risk management strategies. Aon’s damage survey indicated that storm surge has had a profound impact on many Florida residents.
According to a report, global losses from natural disasters reached over $300 billion in 2024, an increase of 14% compared to the long-term average. The data illustrates that while high economic output regions face larger losses, localized disasters, such as Cyclone Chido in the island of Mayotte, can generate significant economic repercussions despite appearing minor on a global scale.
The introduction of parametric insurance serves as a response to the growing concern regarding the financial implications of natural disasters, especially storm surges associated with hurricanes. This insurance model leverages meteorological data to provide a quicker and more flexible payout mechanism compared to traditional insurance approaches, aiding clients in effectively managing their risk exposures. The need for such solutions has been underscored by recent catastrophic events that significantly impacted communities and the economy.
The collaboration between Aon, Floodbase, and Swiss Re in launching a parametric insurance solution marks a significant advancement in the insurance landscape for hurricane-related risks. By utilizing meteorological data, this innovative product offers businesses and public entities a much-needed tool to better shield themselves from storm surge impacts. The economic implications of such disasters underscore the importance of effective risk management strategies in mitigating losses.
Original Source: www.dig-in.com
