Cyclones & Tsunamis: Power & Energy Coastal Assets at Risk

In the wake of a hard market, parametric insurance offers protection against the rising intensity of cyclones and tsunamis

Cyclones and tsunamis are among the most destructive perils, leading to significant human and material losses. While cyclones and tsunamis are intensifying year after year, these growing risks are challenging to specifically and effectively address with existing market solutions. More and more, clients are turning towards parametric insurance solutions against cyclones and tsunamis.

South Asia is particularly  vulnerable to the effects of the global climate crisis, with coastal states such as India, Bangladesh and Sri Lanka at the forefront of risks such as cyclones, earthquakes, and tsunamis. As temperatures and sea levels rise, so has the intensity of cyclones risen over the last four decades across Southeast and East Asia. For example, Cyclone Amphan hit the Sundarbans region in May 2020, causing approximately $14 billion and $131 million in losses in India and Bangladesh respectively, and displacing close to 5 million people.

The intensity of cyclones and tsunamis is projected to nearly double as climate change continues, and as a result of these trends, traditional insurers are becoming increasingly reluctant to cover these risks . For cyclone Amphan in India for example, less than a third of the damage caused was settled. As the South Asian region is primarily composed of developing countries, businesses and populations are even more socioeconomically vulnerable to these growing risks and bear the brunt of the hard market.

Data-driven solutions to build resilience against natural catastrophes 

While climate change continues to escalate and the threat of cyclones and tsunamis grows, both corporates and public entities are often not adequately protected against these risks. Through our data-driven solutions and unique claim assessment process, Descartes’ parametric insurance helps our clients build resilience against these perils. 

Fill out the form to download our Deal Spotlight and learn how Descartes’ parametric insurance covered a power & energy company in India against cyclone and tsunami induced destruction.