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Parametric Solutions and Disaster Risk Management

Our solutions for Latin America, the Caribbean and Iberia

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    Cambie a la versión en Español

    Acting fast in the face of severe catastrophes requires a customised solution. Parametric products bring a simplistic and transparent coverage concept for insurers, companies and the public sector alike. When being confronted with risks such as natural disasters or extreme weather events, industries ranging from tourism and trade to renewable energies and agriculture to government agencies can all avoid liquidity shortages by integrating parametric solutions into their coverage ecosystem. Pre-defined conditions guarantee automatic pay-out when triggered by a major loss event, resulting in a seamless and fast claims settlement process. Parametric solutions are the perfect complement to traditional insurance for policy holders aiming to reduce their risk exposure and bridge the gap between insurable and, so far, uninsurable risks.

    You accept the challenge – We take the risk

    Although parametric solutions have existed since the early 2000s, the digital landscape has only recently been able to deliver the optimal conditions to take full advantage of the value they can deliver. We have combined our in-depth expertise of local markets with a scalable solution that provides fast pay-outs, flexible trigger designs and lean administrative processes. From primary insurers and brokers to companies such as hotels, travel agencies and real estate to port and terminal managers, our parametric solutions are designed to support and encourage growth as well as the development of new business models across industries.
    See how parametric solutions go beyond traditional insurance.

    Key advantages of Parametric Solutions

    Parametric triggers ensure rapid recovery thanks to a simple and quick pay-out process that provides liquidity when you need it most.
    Closing gaps
    Previously uninsurable risks related to tourism, trade, renewable energy, agriculture, finance and other sectors based on the bespoke needs of the customer are now insurable. Traditionally difficult to insure costs such as first response programs, evacuation expenses, increases in cost of living expenses, loss mitigations, and business interruptions can now be covered at a reasonable price.
    Independent third parties provide the data needed to trigger payment based on a simple, individually verifiable and unambiguous process. This information can be accessed immediately after the event. Additionally, the simplicity of the pay-out process substantially reduces claims-related expenses.
    Bespoke products
    In tandem with our experts, parametric solutions are tailor-made to the customer’s exposures, risk appetite and legal environment in mind.

    Innovative solutions and beyond

    Our case studies highlight scalable parametric solutions for successfully adding value to the customer’s coverage ecosystem both for portfolios and single risks:

    The situation:
    The building insurance is based on the residual value of mortgages, accompanied by deductibles. 

    The challenge:
    When a major loss event such as an earthquake occurs, financial resources are needed by mortgage holders for additional expenses (e.g. living expenses), not just mortgage and insurance payments.
    Financial constraints increase tremendously for mortgage holders accompanied by an increased mortgage default rate for the financial institution. 

    The solution:
    A parametric coverage for natural disasters will enable the financial institution to provide immediate financial relief to its clients while at the same time minimizing the risk of having to account for defaulted clients. 

    Tourism Sector in the Caribbean 

    The situation:
    The hospitality industry often finds it difficult to obtain traditional coverage for an increase in cancelations due to the results of an approaching major event.

    The challenge:
    When a major loss event such as a hurricane occurs, hotel chains also want to insure themselves against the lack of guests who cancel their trips. A loss of attraction may arise due to severe weather that limits the ability for potential guests to take advantage of the hotel offerings.

    The solution:
    A parametric cover can be an adequate solution by covering usually hard to insure exposures. By designing a parametric coverage that automatically pays out once a hurricane with pre-determined wind speeds tracks into the covered region, previously uninsured risks are made insurable. The protection gap can then be closed, and the client will have more financial protection in the case of adverse events.

    Further information

    Get in touch with a Munich Re expert
    Christoph Aschenbrenner
    Senior Underwriter
    Regional Lead
    Carmen Biek
    Client Manager
    Regional Lead & Contact for the Caribbean