Aon, Floodbase and Swiss Re launch parametric storm surge solution
Aon announced the launch of a new parametric insurance solution designed to address and mitigate losses from hurricane-related storm surge along the coast of the US.
Developed in collaboration with parametric flood expert Floodbase and Swiss Re Corporate Solutions, the new solution utilizes a variety of meteorological data sources to assess hurricane-related storm surge inundation. In contrast to an indemnity insurance product – where pay-outs are aligned to traditionally adjusted physical damage – the parametric solution is based on water height, allowing policyholders to select the level of pay-out they require for a certain level of storm surge, with a rate calculated accordingly.
“Our data shows that storm surge can be a significant driver of losses for corporates, public entities and (re)insurers alike, so we developed this collaborative parametric solution to help bolster existing levels of cover. The solution can function either as a standalone product or in conjunction with traditional and non-traditional insurance policies, to ensure that clients can secure comprehensive protection for their U.S. storm surge exposures. It is part of a suite of Aon product offerings that together are helping to shape better decisions and more comprehensive sources of liquidity for clients.” – Cole Mayer, head of parametric solutions at Aon.
“Parametric insurance provides a fast, flexible and transparent way to cover financial losses caused by natural catastrophes. A substantial part of hurricane-related losses can be the result of storm surge, and with this innovative solution we can better assist corporations in exposed areas with a rapidly-paying cover that fits their individual risk management strategies.” – Martin Hotz, head parametric natural catastrophe at Swiss Re Corporate Solutions.
“The economic losses in the wake of major hurricanes are staggering. The inherent flexibility of this parametric storm surge product provides U.S. coastal corporations with a much-needed solution to address their specific protection gaps. Floodbase is delighted to have collaborated with Aon and Swiss Re Corporate Solutions to develop this solution, which demonstrates our continuous commitment to uniting technology and risk capital in order to bring more comprehensive protection to cedents.” – Annbjørg Medhaug, chief product and strategy officer at Floodbase.
