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Parametric insurance is emerging as a vital solution to the growing protection gap caused by climate-related risks. As climate change leads to more frequent and severe natural disasters, traditional insurance models struggle, prompting the need for innovative approaches. The development of AI and data-collecting technologies enhances the efficiency of parametric insurance, making it applicable to both climate and traditional risks.
Parametric insurance operates on an index-based model, allowing for quicker payouts when predefined conditions are met, unlike traditional insurance that requires loss adjustments. Examples include Swiss Re's Insur8, which provides typhoon warning insurance, and parametric drought insurance policies in Malawi. The future of parametric insurance looks promising, with expectations for broader applications and increased demand for alternative insurance products.
• Parametric insurance addresses the protection gap from climate-related risks.
• AI enhances the efficiency of parametric insurance solutions.
Parametric insurance pays out based on predefined conditions rather than actual losses, streamlining claims.
This model uses public indices to determine payouts, allowing for faster financial assistance.
Advancements in data collection improve the accuracy and efficiency of parametric insurance pricing.
Swiss Re offers parametric solutions like Insur8, which provides insurance for typhoon warnings.
Aon provides parametric property damage coverage, expanding the applications of parametric insurance.
Blink utilizes a parametric model to cover travel disruptions and lost luggage, showcasing diverse applications.
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