Are you an insurance executive looking for a faster, more flexible, and transparent way to secure coverage for your clients? Look no further than parametric triggers in reinsurance arrangements. According to a recent poll by Reinsurance News, over 80% of industry respondents anticipate the use of parametric triggers to rise in 2024.

But what exactly are parametric triggers? In short, they are a type of insurance policy that pays out based on a predetermined trigger event, such as a hurricane reaching a certain wind speed or an earthquake registering a certain magnitude. Unlike traditional insurance policies, there is no need for lengthy claims processes or disputes over coverage.

Martin Hotz, Head Parametric Nat Cat at Swiss Re Corporate Solutions, explains that the demand for parametric insurance has been steadily rising in recent years due to its three main qualities: speed, flexibility in the use of payouts, and transparency. Advances in technology and data collection have also made the parametric value proposition increasingly compelling as monitoring and measurement of the natural world becomes more precise.

So how can insurance executives utilize parametric triggers in reinsurance arrangements? Here are five steps to get started:

1. Identify the risks: Determine which risks your clients face that could be covered by parametric triggers. This could include natural disasters, weather events, or other types of risks that can be measured objectively.

2. Choose the trigger: Decide on the specific trigger event that will activate the policy payout. This could be a certain wind speed, rainfall amount, or other measurable factor.

3. Set the payout amount: Determine the amount of the payout that will be triggered by the event. This could be a fixed amount or a percentage of the total insured value.

4. Find a partner: Work with a reinsurance partner that specializes in parametric triggers to design and implement the policy. Riskwolf is a great option for insurance builders looking to turn real-time data into insurance.

5. Monitor and adjust: Continuously monitor the trigger event and adjust the policy as needed to ensure that it remains effective and relevant.

By following these steps, insurance executives can provide their clients with faster, more flexible, and transparent coverage that meets their specific needs. And with the growing interest in parametric triggers in the reinsurance market, now is the perfect time to explore this innovative approach to risk management.

To learn more about the rise of parametric triggers in reinsurance arrangements, check out the original article by Reinsurance News. And if you’re ready to explore how Riskwolf can help you develop parametric insurance for your clients, get in touch today.