Parametric Products

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 popular 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.

Kinetic Analysis produces risk assessments and real-time impact information to support a wide range of parametric insurance types using triggers based on modeled hazard (tropical cyclone wind and/or storm surge), damage (tropical cyclone wind and wave) and/or modeled loss.

Kinetic Analysis conducts hazard and impact modeling around the globe. Consequently, we can support parametric insurance applications anywhere, including areas considered 'non-modeled' by other providers.


Current and past programs

Kinetic Analysis was selected as the model and data provider for two major international programs: African Risk Capacity (ARC) and the Caribbean Catastrophe Risk Insurance Facility (CCRIF).

Caribbean catastrophe risk insurance facility

Prompted by the devastating impact of Hurricane Ivan in 2004, the Caribbean Catastrophe Risk Insurance Facility (CCRIF) was established as a regional catastrophe fund that gives participating Caribbean governments the unique opportunity to purchase natural hazard catastrophe coverage with lowest-possible pricing. Designed to limit the impact of devastating hurricanes and earthquakes on government finances, the catastrophe coverage quickly providing financial liquidity when a policy is triggered. CCRIF is the world’s first multi-country risk pool and the first insurance instrument to successfully develop parametric policies backed by both traditional and capital markets.

CCRIF engaged Kinetic Analysis Corporation to quantify the risk of catastrophic impacts (including both the frequency and severity of losses) for each participating territory, and the CCRIF insurance program as a whole, for both tropical cyclone and earthquake perils.

When a participating country was struck by a tropical cyclone or earthquake event during the policy period, the payout on the policy is determined using the loss estimate produced by Kinetic Analysis Corporation's hazard and loss modeling.

For complete transparency, the modeling, hazard and damage modeling techniques are from the published scientific literature, with citations available for the techniques applied for CCRIF.

african risk capacity

African Risk Capacity (ARC) develops products that provide rapid financing and early response to droughts and tropical cyclones. Kinetic Analysis Corporation worked with ARC Ltd. to develop a parametric tropical cyclone model for the South West Indian Ocean region. The tropical cyclone model includes wind, storm surge and wave damage. ARC Agency has been engaging Madagascar, Comoros, and Mauritius around the product.

ARC Agency first used the tropical cyclone model in 2017 for Tropical Cyclone Enawo. The cyclone formed in the Indian Ocean and grew to a Category 4-equivalent tropical cyclone. Enawo made landfall on Madagascar on 7 March 2017. The African Risk Capacity tropical cyclone model was able to predict the numbers of people affected by the cyclone in each monitored location in Madagascar. The model was also used as an early warning and monitoring tool to disseminate data regarding the real-time impacts of Enawo.