For starters, let’s define parametric insurance. Parametric insurance is a program that’s paid based on a preset index, making it easier for business owners to know what to expect, whereas some insurance coverages may leave room open for interpretation based on the wording in the contract. It’s often a more popular option for businesses that may incur losses due to natural disaster or weather-related events, which make it hard to measure losses. Compared to normal property insurance, which often delays the claims process, placing you at further financial risk, parametric insurance streamlines the claims process.
According to insurancejournal.com, parametric insurance solutions offer a means to guarantee direct payout after a qualifying event. It also protects against unpredictable, but potentially devastating risks in ways traditional insurance packages cannot.
This insurance covers the probability of a predefined event happening. Such events could consist of a major hurricane, earthquake, hailstorm, etc. After the event, the insurance company pays out according to a predefined scheme. The client defines a geographical location to be covered by this type of insurance which gives the policyholder some flexibility. For example, the client may choose to cover infrastructure or crop location critical to their business and livelihood.
Parametric insurance often provides cover excluded by indemnity style insurance policies, which are based on how much loss is experienced. Those that are insured receive compensation when a triggered event occurs, based on parameters and reimbursement values determined before coverage. When designed properly, parametric-based insurance products greatly increase the speed claims are paid.
Revolutionizing Environmental Data
Hailios has revolutionized the collection of environmental data. Hailios is a free-standing system that empowers insurance providers, especially parametric providers, to make more accurate and timely decisions. Once the sensor is in place, it records data at the granular level, time-stamping and recording the impact of each hail strike. Insurance providers and owners receive more details about the overall storm, eliminating the need for educated guesses.
By using a predetermined set of criteria for payouts, parametric insurance processes eliminate the need for site visits and simplify the handling of claims. When busy adjusters get back-logged, everything grinds to a halt. Hailios is the only company that can provide the hyperlocal data that the parametric storm insurance model relies on to pay claims. Learn more about how Hailios works here.
Hailios was selected as one of the 11 Insurtech companies to watch in 2021 by Property Casualty 360, as well as one of the Insurtech Impact 25 for 2021 by Oxbow Partners. For more on the benefits of using Insurtech, check out our blog “8 Benefits of Using Insurtech” here.