Aon, Floodbase, and Swiss Re have launched a parametric insurance for hurricane-related storm surge, enhancing coverage for various entities. The product utilizes meteorological data to assess risks and can be combined with traditional policies. This initiative follows significant losses from recent hurricanes and aims to provide rapid financial assistance to those affected.
Aon, Floodbase, and Swiss Re have introduced a new parametric insurance product designed to protect against storm surge associated with hurricanes. This innovative offering leverages meteorological data to evaluate hurricane-related risks effectively. The collaboration aims to enhance coverage levels for corporate clients, public entities, and reinsurers, addressing the significant financial impact that storm surges can generate. This solution can operate independently or in tandem with traditional insurance policies to ensure comprehensive protection for U.S. storm surge exposures.
The launch comes after significant losses in 2024 attributed to Hurricanes Helene and Milton, which caused devastating flooding and wind damage across the southeastern United States, particularly in western Florida. Aon’s Impact Forecasting and Catastrophe Management teams documented the extensive storm surge damage encountered by Floridians. This insurance product is part of Aon’s broader efforts to provide clients with effective risk management tools and liquidity solutions amidst rising natural disaster risks.
Martin Hotz from Swiss Re elaborated that parametric insurance offers a quick and transparent method to compensate for losses resulting from natural disasters. He emphasized that, given that storm surges contribute substantially to hurricane-related losses, this new solution is tailored to support corporations in high-risk areas. The swift payment structure of the insurance is designed to align with the unique risk management needs of each entity.
In 2024, global catastrophic losses surpassed $300 billion, reflecting a 14% increase over the long-term average. Unfortunately, while the concentration of disaster losses is typically noted in economically robust regions, smaller-scale disasters can inflict disproportionate damage. For instance, Cyclone Chido devastated the island of Mayotte, resulting in damages that threaten its economic stability.
The development of parametric insurance products marks a significant advancement in the efforts to mitigate financial risks associated with natural catastrophes such as hurricanes. This specific type of insurance utilizes meteorological data and predefined parameters to trigger payouts, offering a rapid response to insured losses. In light of increasing hurricane activity and the financial toll on both public and private sectors, innovative insurance solutions are critical for enhancing resilience against future storm-related impacts.
The introduction of parametric insurance for storm surge by Aon, Floodbase, and Swiss Re represents a proactive measure to address the increasing frequency and impact of hurricanes. This collaborative solution provides a vital safety net for affected corporations and entities while promoting responsible risk management. As natural disasters become more prevalent, such innovations will be essential to safeguarding economic stability.
Original Source: www.dig-in.com
