Parametric underwriting has been greatly enabled by new data sources for indices and can be used alongside traditional indemnity insurance, particularly as property indemnity markets show price stability, according to a panel of industry executives.
The property catastrophe market has been challenged “for quite some time” and reinsurance is not as readily available as it used to be, said Daniel Vetter, New York-based director, North America, for Descartes Insurance Solutions Inc., during a Monday session at Riskworld, Risk & Insurance Management Society Inc. Annual Meeting in Atlanta.
Mr. Vetter added that Descartes, which specializes in parametric insurance, has seen “a lot more activity”; in the parametric risk space, including for so-called secondary perils such as tornado, hail and wildfire.
“As we head into this market cycle, with properties as they are, buyers and venture professionals are looking for alternatives. You may have to think about building a blended program that includes traditional reimbursement and the parametric product, says Brando Soto, Boston-based director of underwriting and risk management for Vertex Pharmaceuticals Inc.
“We should look at parametric and traditional as two parts of the same solution,” said London-based Tina Kirby, senior underwriter at Munich Re Markets, part of Munich Re Ltd. “Parametrics is one of the alternative ways of looking at risk. So much more data is available to us that we see a better and broader approach to looking at risk.
“Around us and in low Earth orbit, there is an increasing diversity of measurements” made by devices using optical and radar technology, said Stephen Lathrope, London-based global head of insurance at Iceye, which uses synthetic aperture radar from a proprietary network of microsatellites to provide climate-related data to government authorities and private industry.