Descartes’ parametric cyclone insurance offers brokers, corporate, and public sector clients an alternative to optimize premium and facilitate placements, customized to each insured location’s exposure and specific vulnerabilities.
Our parametric cyclone covers leverages near-real-time data on a cyclone event’s track and wind-speed.
We monitor these trajectories in a pre-defined perimeter around the program’s insured locations – from single-spot covers to thousands of risks across different countries.
Together with the client and their broker, we design a tailor-made payout structure, taking into account each client’s specific needs and building resistance to wind.
The straight-forward structure pays out a pre-agreed amount for each category of wind speed if a hurricane path crosses a specific radius encircling the insured locations.
Client Need: A large hospitality group with extensive hurricane exposure in the Caribbean was facing a more than 50% premium increase in their traditional program despite being loss-free, simply due to capacity restrictions in this peak zone.
Pain Point: Increasing their insurance budget at present, when the hospitality industry is sailing a rough sea, was not an option. The client needed to find a flat-premium option, while guaranteeing a full-limit cover in order to meet contractual obligations with its lenders.
Our Solution: Hand-in-hand with the client’s in-house risk management, we designed payout structures for each wind speed and each perimeter around all insured locations. Given the straight-forward simplicity of the cover, we were able to price the policy to both match the client’s budget and ensure a full-limit cover. The client could confidently carve-out their peak hurricane exposure from their traditional property program and fully place it with our parametric cover.
The Result: Descartes’ dedicated cyclone parametric product allowed the client to keep premium flat and maintain a full limit cover on an international program, satisfying their finance leadership, in-house risk management, and external lending parties.
Our AI-driven technology monitored the parameters in real-time, notifying the client when the policy was triggered by an early-season hurricane and automatically paid out the policy claim. The client received the funds within 5 days of the event and was able to cover repair costs & business interruption expenses seamlessly.
