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Alternative alternatives can fill gaps in traditional policies



Parametric insurance is being investigated by some to address non-physical damage business interruption risks.

Parametric products can be used to insure risks that are not normally covered by the traditional insurance market, such as revenue losses that are not directly related to property damage, says Stephane Godier, Regional Manager America, Axa Climate, a division of Axa SA.

For example, a transport company that is dependent on agricultural transport for a significant part of its income may be indirectly affected by the effect of climate change on crop production. "There is enormous potential in the supply chain because many actors along the supply chain are exposed to systemic risk due to climate risk," says Godier.

"It's another way of looking at exposure to non-proprietary business interruptions," said Evan Stait, commercial account manager at Hub International Ltd. in Kelowna, British Columbia.

A municipal budget for snow removal , for example, depleted early of excessive snowfall, can be covered with a snowfall indexed coverage, he said.In conversely, a ski resort can be insured against lack of snow on the slopes.

The COVID-1

9 pandemic, which has led to more than 1,000 lawsuits related to business interruptions, has also led some to consider parametric coverage.

“People realize because of the pandemic that there is greater, broader non-physical damage to business interruptions that can occur, and because these products are designed to pay based on an event that occurs and not because you have suffered an injury, people are looking hard at it now, says Chad Wright, Head of Risk Analysis and Alternative Risk Transfer in the United States and Canada for Marsh LLC in Atlanta. 659002]

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