Parametric Hurricane Insurance: A Game-Changer for Agents and Their Clients

Interested in learning more?

Explore how Arbol is bridging the climate gap with parametric insurance solutions.

Explore Solutions
Explore Our Platform
Contact Us
Dec 1, 2023
By Arbol

The Evolution of Hurricane Insurance in a Dynamic Climate

Over the last two decades, hurricanes have become more intense, slower-moving, and unpredictable. As a result, property owners in vulnerable regions have been saddled with unprecedented challenges. While traditional insurance models have been the backbone of financial protection for decades, they often fail to deliver timely and transparent payouts in the aftermath of devastating hurricanes. Enter parametric hurricane insurance—a pragmatic solution that promises swift, objective payouts based on predefined metrics. For agents, this risk-management solution offers an opportunity to serve their clients better and positions them at the forefront of a transformational shift in the insurance industry. 

Color-coded U.S. map showing varying home insurance price increases by state from January 2022 to July 2023."‍
Color-coded U.S. map showing varying home insurance price increases by state from January 2022 to July 2023."

The Value of Hurricane Insurance for Property Owners

For property owners in regions susceptible to hurricanes –like Florida –insurance isn't merely a contractual obligation; it's a safeguard against nature's unpredictable wrath. Although the conventional insurance paradigm offers post-disaster evaluations, these often get mired in disagreements over loss valuations. Parametric hurricane insurance neatly side steps such quandaries by automating the claims process and eliminating the need for on-site claims adjusters. 

This forward-thinking model is anchored in predetermined criteria, such as the hurricane's category or wind velocity. When pre-specific conditions are realized, the policy is promptly activated, guaranteeing expedited disbursements. This approach accelerates the payout process by circumventing the traditional damage appraisal phase, offering financial support when it's most needed.

Why Agents Are Embracing Parametric Hurricane Insurance

Parametric hurricane insurance offers a trifecta of compelling advantages:

  • Efficiency: Unlike traditional insurance claims, which often take weeks or months to process, parametric insurance policies are quickly executed. Upon the occurrence of a qualifying event, clients are swiftly paid, enabling them to address their immediate financial concerns.
  • Versatility: The benefits of parametric payouts extend beyond just property repairs. They cater to various financial requirements, from reducing business overhead to recouping lost revenue.
  • Clarity: Parametric insurance contracts are defined by their lucidity. Because they are based on pre-set parameters, clients are spared unnecessary ambiguities.

Decoding Parametric Hurricane Insurance: An Agent's Primer

For agents, mastering the nuances of parametric hurricane insurance is key. Here's a distilled overview:

  • Activation of the policy hinges on a tropical cyclone attaining a pre-specified intensity.
  • Using the example of parametric STORM insurance, the emphasis is on recording the peak wind velocity at the insured premise throughout the cyclone's span.
  • In the aftermath of the hurricane, a granular wind profile becomes accessible. This dataset, chronicling wind metrics at every kilometer, ascertains the apex one-minute sustained wind velocity near the policyholder's site. Independent of the hurricane's eventual trajectory or its classification on the Saffir-Simpson scale, the policy's payout is anchored to this wind metric, mirroring the actual experience of the insured.

Arbol - Pioneering the Future of Hurricane Insurance

Arbol is at the vanguard of the parametric insurance revolution. By synergizing big data, artificial intelligence, machine learning, and blockchain, we are bringing added transparency and efficiency to the domain of managed weather risks. In sum, we’re a one-stop shop for agents looking to assess and mitigate their hurricane-related risks. If you’re keen to learn more, contact us here

About the Author