Due to the benefits it offers over indemnity insurance, including lower costs and near-immediate payout after an event, parametric-based risk transfer mechanisms are growing in popularity and use among insurers, reinsurers and the insured. Parametric insurance is well-suited for deployment in developing countries, where limited data and institutional capacity greatly increase the costs of indemnity insurance.
Sustainable parametric insurance programs require 1) a quantitative assessment of the long-term risks of the hazards and/or impacts covered under the parametric program, for use in risk pricing, and 2) a compatible mechanism for analyzing hazard events that occur during the policy period, for use in policy trigger assessment. With our robust multi-hazard and impact modeling platform, Kinetic Analysis produces risk assessments and real-time impact information to support a wide range of parametric insurance types:
- Hazard-specific triggers: single- or multi-hazard modeling for tropical cyclone (wind, storm surge), severe weather (excess rainfall / drought, winds, temperatures), and earthquake (ground motion) hazards.
- Damage and modeled-loss triggers: using our detailed hazard analysis capacity (tropical cyclone, severe weather, and earthquakes), we produce damage- and loss-based risk assessments and real-time impact estimates for client-specific assets or our global, high-resolution proprietary proxy exposure data.
Kinetic Analysis conducts our hazard and impact modeling around the globe. Consequently, we can support parametric insurance applications anywhere, including areas considered 'non-modeled' by other providers.
Kinetic Analysis has been actively involved with parametric insurance for over six years, in support of the Caribbean Catastrophe Risk Insurance Facility [CCRIF], the first multi-country parametric sovereign risk insurance program in the world. Kinetic Analysis provides CCRIF with risk assessment and current event trigger analysis in support of its coverage for multiple perils: