Aon, Floodbase, and Swiss Re Introduce Parametric Insurance for Hurricane Storm Surge

Aon has launched a new parametric insurance solution to mitigate commercial losses from hurricane-related storm surges in the U.S. Designed with Floodbase and Swiss Re, this product aims to address gaps in traditional insurance policies. The solution allows policyholders to base coverage and payouts on specific metrics of storm surge, enhancing rapid financial recovery after events like Hurricane Helene, which caused extensive flooding and significant economic losses.

Aon plc has unveiled a new parametric insurance solution aimed at mitigating commercial losses resulting from hurricane-related storm surges along the U.S. coastline. This product, developed in collaboration with Floodbase and Swiss Re Corporate Solutions, addresses protection gaps present in standard insurance policies that may impose high deductibles or significant exclusions related to storm surge risks.

The launch is particularly timely as Aon’s 2025 Climate and Catastrophe Insight report highlights Hurricane Helene as the most catastrophic event in 2024, with estimated economic losses of approximately $75 billion largely due to flooding. Insurers are expected to incur significant claims, totaling around $37.5 billion, partly covered by the National Flood Insurance Program.

Storm surge damage can constitute over one-third of the total losses from hurricane events. According to Cole Meyer, head of Aon’s parametric solutions, there is a growing recognition of storm surge as a critical loss driver for various stakeholders, including corporates and (re)insurers. This collaborative parametric solution aims to enhance the coverage available.

The development of this parametric insurance product is rooted in an increasing need for businesses to safeguard against the unique challenges posed by storm surges. Traditional insurance often falls short during catastrophic events due to high deductibles and exclusions. Parametric insurance offers a viable alternative by providing payout based on specific metrics, making it an attractive option for entities exposed to natural disasters, particularly hurricanes.

In summary, Aon’s innovative parametric insurance solution seeks to provide enhanced coverage against storm surge damages, particularly following significant hurricane events. By leveraging collaboration with Floodbase and Swiss Re, Aon addresses critical gaps in the traditional insurance landscape. This new approach underscores the impact of storm surge risks and the necessity for adaptive financial strategies in climate-exposed regions.

Original Source: www.insurancejournal.com