Intact but interrupted: parametric solutions for non-damage business interruption risks

featuring WTW, Munich Re, Swiss Re, Aon, Generali and more

Supply chain pressures, the COVID-19 pandemic and a climate-induced increase in weather variability have disrupted businesses around the world in recent years.

Organisations are increasingly worried about ‘non-damage business interruption’ (NDBI) losses not covered by traditional insurance. Dozens of events in recent years have caused more than $1 billion USD in NDBI losses, from natural catastrophes to infrastructure failures.

Not all NDBI events are insurable, but parametric insurance is increasingly enabling coverage for risks that were previously difficult or impossible to insure. This report examines the established and emerging use cases of parametrics for extreme events, weather-dependent industries and supply chains.

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InsTech’s latest report will help you to:

  • Identify the NDBI risks faced by different sectors with historic loss examples
  • Learn about parametric products already being used for NDBI risks
  • Understand the data sources used to provide parametric NDBI insurance
  • Stay ahead of trends by learning about areas of high potential for new product development

Featuring contributions from:

Parametric Landing page

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Key takeaways:

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A growing number of corporations are choosing parametric insurance to cover physical natural catastrophe risks. These ‘early adopters’ are now also using parametrics for the NDBI losses associated with local catastrophes and other extreme events.
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The energy sector has used parametric risk transfer to hedge weather variability for decades. Now more weather-dependent industries are turning to parametrics to protect their balance sheets.
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Parametric insurance has proved to be suitable for supply chain risks where little or no insurance was available before. More parametric products are being developed to address specific supply chain challenges.
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Recent advances in modelling and available data enable new parametric structures where almost any cause of NDBI loss can be covered and pay-outs more closely align with losses. The challenge is designing products that suit customers’ needs and that insurers are comfortable underwriting.

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Contents:

  • Introduction
  • Why this matters
  • Demand and operations in extreme events
  • Energy and weather-dependent industries
  • Solutions for global supply chains
  • New products to measure the unpredictable
  • What next?

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