Aon, Floodbase, and Swiss Re Introduce Parametric Insurance for Storm Surge
Aon, Floodbase, and Swiss Re have introduced a parametric insurance product for hurricane-related storm surge. This collaboration leverages meteorological data to mitigate financial losses from storm surge events, offering comprehensive coverage for affected entities. The initiative addresses increasing risks from natural disasters, particularly in the wake of severe hurricanes.
Aon, Floodbase, and Swiss Re have launched a new parametric insurance product specifically designed to cover storm surge events related to hurricanes. This innovative offering emerged from a collaborative effort among the three entities and employs meteorological data to quantify hurricane-induced storm surge. According to Cole Mayer, head of parametric solutions at Aon, this initiative addresses the significant losses that entities, including corporates and public institutions, can face due to storm surge phenomena.
This parametric insurance can be utilized independently or alongside traditional and non-traditional insurance products, ensuring comprehensive coverage for clients exposed to storm surge risks in the United States. It aligns with Aon’s broader suite of products that aim to enhance decision-making and liquidity for clients navigating such risks.
The year 2024 saw substantial losses for insurers, particularly from Hurricanes Helene and Milton. Hurricane Helene notably caused severe flooding and wind destruction in the Southeastern United States, resulting in extensive storm surge damage around Tampa Bay. Aon’s Impact Forecasting and Catastrophe Management teams noted the significant impact of storm surge in their damage assessment conducted in Florida in November 2024, as reported by local residents.
Martin Hotz, head of parametric natural catastrophe solutions at Swiss Re Corporate Solutions, remarked that parametric insurance offers a swift, flexible, and transparent method of addressing financial losses due to natural disasters. He emphasized that a considerable portion of hurricane losses is attributed to storm surge incidents, underscoring the importance of their timely parametric solution for businesses in vulnerable areas.
Global disaster losses have exceeded $300 billion, marking a 14% increase above the long-term average, highlighting the ongoing risk posed by natural calamities. The geographical distribution of these losses often correlates with nations exhibiting high economic productivity, although smaller-scale disasters can also have profound localized effects, as evidenced by Cyclone Chido’s catastrophic impact on the island of Mayotte, off the coast of Madagascar.
The article discusses the newly launched parametric insurance product developed collaboratively by Aon, Floodbase, and Swiss Re, which specifically targets hurricane-related storm surge risks. The use of advanced meteorological data in this insurance product reflects a growing trend in the insurance industry to provide tailored, rapid-response financial solutions amidst increasing natural disaster frequencies and intensities. The background of the insurance product stems from the need for more comprehensive coverage options in the face of frequent, devastating storms.
The launch of parametric insurance by Aon, Floodbase, and Swiss Re presents a promising advancement in managing storm surge risks associated with hurricanes. By leveraging meteorological data, this product aims to provide quick financial relief and robust coverage for affected entities. As global losses from natural disasters rise, such innovative solutions are vital for enhancing financial resilience in exposed regions.
Original Source: www.dig-in.com
