Aon, Floodbase, and Swiss Re Introduce Parametric Insurance for Storm Surge
Aon, alongside Floodbase and Swiss Re, has launched a parametric insurance product focused on storm surge risks from hurricanes. This innovative solution utilizes meteorological data to enhance coverage for public entities and corporations. It is designed to deliver rapid compensation and can be combined with traditional insurance policies, responding to the rising financial losses from hurricanes, particularly from storm surge impacts.
Aon, in collaboration with Floodbase and Swiss Re, has introduced a parametric insurance product tailored for storm surge risk associated with hurricanes. This innovative insurance utilizes meteorological data to evaluate potential storm surge impacts, thereby providing essential coverage for corporate and public sector entities. As stated by Cole Mayer, head of parametric solutions at Aon, this solution aims to enhance coverage levels addressing the significant losses attributed to storm surge effects.
The parametric insurance can operate independently or in conjunction with traditional and alternative insurance policies, ensuring clients receive comprehensive protection against storm surge risks. This initiative is part of Aon’s broader portfolio, which seeks to assist clients in making informed decisions and improving their liquidity options in response to storm-related events. Recent reports highlighted that Hurricanes Helene and Milton were among the most costly events for insurers in 2024, with Helene causing widespread devastation in the southeastern United States, particularly due to storm surge.
Aon’s Impact Forecasting and Catastrophe Management teams have engaged in extensive surveys post-storm events, revealing the extent of damage caused by storm surges. According to Martin Hotz, head of parametric natural catastrophe at Swiss Re Corporate Solutions, parametric insurance offers a swift and transparent mechanism for addressing financial losses from natural disasters. This product is designed to cater to the specific risk management needs of corporations located in vulnerable areas.
Moreover, global losses from natural disasters exceeded $300 billion in 2024, a figure that was 14% above the long-term average. The geographical distribution of these losses demonstrates varying impacts, particularly in regions with substantial economic activities. Some disasters, although presenting minor losses on a global scale, have devastating local consequences, as illustrated by Cyclone Chido’s impact on the island of Mayotte, which threatens to surpass the island’s GDP.
The introduction of parametric insurance products represents a significant advancement in risk management for entities exposed to natural disasters such as hurricanes. These products utilize precise meteorological data to predict and respond to financial losses due to specific climate events, allowing for quick and reliable compensation. This insurance model addresses the reality that storm surges can drive substantial financial losses, necessitating robust insurance options to safeguard assets and infrastructure in vulnerable areas.
In conclusion, the collaborative effort by Aon, Floodbase, and Swiss Re to launch parametric storm surge insurance marks a critical development in insuring against hurricane-related risks. By leveraging meteorological data, the new insurance solution enhances coverage and delivers rapid financial support to affected entities. With global catastrophe losses on the rise, such innovations are vital for effective risk management strategies in disaster-prone areas.
Original Source: www.dig-in.com
