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Parametric solutions

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    The ability to respond immediately to natural disasters or weather-related losses is the key to mitigating detrimental knock-on effects and getting you back to normal business quickly. This requires quick and flexible risk management. Parametric products provide a simple and transparent coverage concept for insurers, businesses and the public sector alike. They complement traditional insurance coverage for policyholders aiming to reduce their risk exposure and can cover risks that have traditionally been uninsurable. 

    Why turn to us

    Although parametric solutions in the form of cat bonds have been in existence since the mid-1990s, the digital landscape has only recently been able to take full advantage of the value they can deliver.

    We have combined our knowledge of local markets with a scalable solution that provides fast payouts, flexible trigger designs and a lean administration.

    From primary insurers and brokers to specific business sectors such as hotels, travel agencies, real estate, or ports and terminals, our parametric solutions are designed to support growth and encourage new business models.

    Discover our parametric covers

    Munich Re

    Key advantages of parametric solutions

    Rapid recovery with a simple and quick payout process that provides liquidity when you need it most.
    Elimination of coverage gaps
    Previously uninsurable risks in tourism, trade, renewable energy, agriculture, finance and other sectors, based on the bespoke needs of the customer, are now covered. Expenses for items such as first-response programmes, evacuation, loss mitigation or clean-up costs, which are typically not covered or are sub-limited, can now be included.
    Independent third parties (e.g. official reporting agencies) provide the data needed to trigger payment, based on a simple, verifiable and unambiguous process. The simplicity of the payout process substantially reduces claims-related expenses and delays in extraordinary situations.
    Bespoke products
    Together with our experts, parametric solutions are tailor-made for each customer’s individual exposure, risk appetite and legal environment.

    How they work

    The basic concept of parametric solutions is quite simple: Parametric insurance covers the probability of a predefined event happening (e.g. a major hurricane or earthquake), paying out according to a predefined scheme instead of a lengthy claims adjustment process.

    Events may refer to an index-based trigger (e.g. crop shortfall) or an event within a defined area (often referred to as a ‘cat-in-a-box’). Exemplifying the cat-in-a-box concept, a policy might be structured to pay out 50%, 75% or 100% of a predefined limit for a Cat 3, Cat 4 or Cat 5 hurricane occurring within a 50-mile radius around the client’s point of interest. The notion of ‘point of interest’ is an interesting feature of parametric cat-in-a-box solutions: The client defines a ‘point on the map‘, i.e. a long-lat geo coordinate. Hence, the cover is not limited to the insured’s own locations but can also include infrastructure critical for the client.

    Since the payout is based on independently verifiable and unambiguous parameters, the predetermined payment is made quickly, simply and without lengthy adjustments.

    In addition to off-the-shelf solutions for standard perils like earthquakes and tropical cyclones, we also develop tailor-made concepts for other hazards such as wildfires, floods, or rainfall/drought. Our experts will design the best solution for you, taking into account both regulatory, legal and accounting aspects, as well as reporting and trigger requirements. 

    Over two-thirds of the global economy is dependent on weather conditions. Use our innovative insurance solutions to mitigate your weather-related risks:

    • Protect your company against the financial consequences of unfavourable weather conditions, and other climate risks, with weather derivatives or weather insurance based on parametric triggers, which reimburse lost revenue and any additional costs incurred. (More)
    • In an energy-hungry world in which technology-based economies are becoming more demanding, plant owners, investors and customers alike all depend on an uninterrupted power supply. We have solutions for virtually any risk related to power generation, in particular for renewable energy, which is directly affected by the volatility of the weather. (More)

    Agricultural production depends on the weather more than any other economic sector. Depending on your needs, we can structure agricultural risk transfer solutions to secure your cash flow:

    • Weather index solutions allow you to manage or “hedge” weather-related risks.
    • Yield index insurance: We have the right tools to price the risk of crop shortfalls and assess actual yields.
    • In addition to weather data, vegetation data derived from satellite sensors can be applied as an index parameter.
    • Index insurance solutions for small-scale farming funded by international donors.

    Beyond pure risk transfer:  

    Are you looking for a solution with tailor-made triggers to protect your organisation’s balance sheet when climate-related weather disaster strikes?

    Our teams of parametric solution experts in Beijing, Munich, New York, Sydney and Zurich will be pleased to help.

    Come and discuss your coverage gaps with us today.

    Traditional covers often only respond after a lengthy adjustment period and fail to cover all the costs for restoring business to pre-event levels. The One Cat   solution concept offers an unprecedented level of transparency and a very simple payout process:

    • One Storm parametric storm cover: A new and fully customisable parametric trigger solution specially designed for tropical cyclones.
    • One Quake parametric earthquake cover: Should the intensity of an earthquake in a certain area exceed an agreed threshold, Munich Re will pay out according to a pre-defined matrix.
    Contact us for parametric covers for corporates
    Jonas Haug
    Jonas Haug
    Munich Re F&C, Head of Business Development
    Patrick Steenwegen
    Patrick Steenwegen
    Head of Corporate Property Insurance Europe & International Placements
    Munich Re Facultative & Corporate
    Steven Bar
    Steven Bar
    Parametric Structurer for the Americas
    Capital Partners
    James Doona
    James Doona
    Market Underwriter, Senior Vice President, New York City
    North America, Caribbean
    Contact us for agricultural risk covers
    Rainer Hartmann
    Rainer Hartmann
    Head of AgRisk Partners
    Alexa Mayer-Bosse
    Alexa Mayer-Bosse
    Contact us for weather risk covers
    Marcel-Steffen Reif
    Marcel-Steffen Reif
    Head of Weather & Commodity EMEA
    David Stevenson
    David Stevenson
    CEO of Munich Re Trading LLC
    Contact me for parametric covers for financial institutions
    Marion von Achten
    Marion von Achten
    Market Underwriter, Vice President, Munich
    Australia, New Zealand
    Contact me for parametric covers for the public sector
    Michael Roth
    Michael Roth
    Public Sector Practice Lead, Munich
    Public Sector

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