Aon plc has launched a new parametric insurance solution aimed at mitigating losses from hurricane-related storm surges along U.S. coasts. Developed with Floodbase and Swiss Re, the product addresses gaps in traditional insurance. Highlighted by recent reports, significant financial losses from hurricanes underscore the need for flexible insurance solutions.
Aon plc has introduced a new parametric insurance solution aimed at mitigating commercial losses from hurricane-related storm surges along the U.S. coast. Developed in collaboration with Floodbase, a parametric flood insurance provider, and Swiss Re Corporate Solutions, this innovative product seeks to fill coverage gaps prevalent in traditional insurance policies, which often impose high deductibles and significant exclusions for storm surge risks.
The Aon 2025 Climate and Catastrophe Insight report highlighted Hurricane Helene as the most destructive natural catastrophe of 2024, causing estimated economic losses of about $75 billion, primarily due to flooding. The losses from hurricanes Helene and Milton led to around $37.5 billion in claims for insurers, including payouts from the National Flood Insurance Program due to the large financial impact of these storms.
Storm surge damage can represent more than one-third of total loss costs in some hurricane events. Cole Meyer, head of Aon’s parametric solutions, indicated that the firm’s research demonstrates that storm surge is a critical factor in losses incurred by corporations and public entities. Consequently, Aon seeks to strengthen existing insurance coverage through its collaborative parametric solution.
Parametric insurance offers flexibility, allowing policyholders to select payout levels based on water height and specific monitoring data. This modern approach provides coverage for any financial loss associated with storm surge events, increasing the protection offered compared to traditional indemnity insurance.
Martin Hotz, head of parametric natural catastrophe at Swiss Re Corporate Solutions, remarked that parametric insurance presents a “fast, flexible and transparent” means of safeguarding against financial losses from natural disasters. This new solution is designed to support corporations in vulnerable areas with expeditious coverage tailored to their risk management strategies.
In light of recent catastrophic events, Aon and its partners, Floodbase and Swiss Re, have developed a parametric insurance solution focusing on storm surge events caused by hurricanes. This solution addresses gaps where traditional insurance may fall short, particularly in light of high deductibles and exclusions for storm surge risks. It aims to provide a more comprehensive safety net for businesses and municipalities prone to coastal flooding.
Aon’s new parametric insurance solution is an important advancement in addressing the financial losses associated with hurricane-related storm surges. Collaborating with Floodbase and Swiss Re, it offers a tailored coverage option to enhance traditional policies, ensuring quicker payouts and better risk management for affected entities. This innovative approach significantly improves protections against the growing threat posed by natural disasters.
Original Source: www.insurancejournal.com
