SRS Altitude LinkedIn Series Episode 8: When to Consider Parametric Insurance

Unlike traditional insurance, which compensates for actual losses, parametric insurance offers a predetermined payout based on the occurrence of a specific event. This approach sidesteps several challenges of traditional indemnity insurance.

For starters, parametric insurance covers financial losses that might otherwise fall through the cracks of conventional policies. For example, it can compensate for business interruptions not directly tied to physical damage, something traditional insurance might struggle to address.

Timing is another advantage. Traditional insurance can take months to assess damage and deliver payments, potentially leaving a company in financial limbo. With parametric insurance, the payout is triggered automatically by the event, delivering funds quickly when they’re needed most.

Finally, parametric insurance eliminates the uncertainty around claim amounts. Since payouts are predetermined and tied to the event’s parameters, there’s no need for lengthy loss assessments or adjustments - just swift, reliable financial support when it’s needed.