Aon, Floodbase, and Swiss Re Unveil Innovative Parametric Storm Surge Insurance

Aon, Floodbase, and Swiss Re have introduced a parametric insurance product aimed at storm surge due to hurricanes, leveraging meteorological data to assess risks. This insurance may stand alone or supplement traditional policies, providing significant coverage for U.S. storm surge exposure. The collaboration addresses the notable storm-related losses that businesses face, especially in light of recent severe weather events like Hurricanes Helene and Milton.

Aon, Floodbase, and Swiss Re have collaborated to introduce a parametric insurance product specifically designed for storm surge associated with hurricanes. This innovative insurance utilizes meteorological data to evaluate storm surge risks, addressing the significant losses that corporates, public entities, and reinsurers can incur from such events. According to Cole Mayer, head of parametric solutions at Aon, this product can be offered independently or alongside existing insurance policies, thus providing clients with robust coverage against U.S. storm surge risks.

In 2024, hurricanes were particularly damaging, with Hurricanes Helene and Milton reported as the most costly events for insurers. Hurricane Helene not only resulted in extensive flooding and wind destruction across the southeast United States but also led to severe storm surge damage in western Florida, particularly near Tampa Bay. The majority of losses during this period were attributed to tropical cyclones and severe convective storms, with inland flooding contributing to hurricane-related damages.

Aon’s Impact Forecasting and Catastrophe Management teams conducted a damage survey in Florida in late November 2024, following reports from residents about the impact of storm surge. Martin Hotz, head of parametric natural catastrophe at Swiss Re Corporate Solutions, articulated that parametric insurance offers a swift and transparent means of covering financial losses from natural disasters. This solution aims to deliver fast payouts to corporations at risk, effectively enhancing their risk management approaches.

The collaboration between Aon, Floodbase, and Swiss Re marks a significant advancement in the insurance sector, particularly in the context of increasing frequency and severity of hurricanes and associated storm surges. The product aims to provide a robust safety net for businesses and public entities, which face escalating risks from natural catastrophes. Understanding the dynamics of parametric insurance and traditional policies is vital for clients to achieve comprehensive protection for their assets. Recent years have seen hurricane-related damages escalate, highlighted by hurricanes such as Helene and Milton, which resulted in substantial economic losses. By assessing these events, insurers can identify the need for innovative solutions like parametric insurance to better manage risks and expedite claims processing for affected clients. This growing necessity reflects broader climate trends that place insurers and policyholders in a continuously challenging environment.

In summary, the launch of parametric insurance for storm surge by Aon, Floodbase, and Swiss Re provides an important tool for managing the financial implications of hurricanes. The new product is designed to complement existing insurance policies, ensuring comprehensive coverage and quick claims processing. With substantial losses reported from recent hurricanes, this innovative approach highlights the necessity for adaptive insurance solutions to mitigate risks associated with natural disasters.

Original Source: www.dig-in.com