Speaking in an interview with Reinsurance News, Martin Hotz, Head Parametric Nat Cat, Swiss Re Corporate Solutions, suggested that the demand for parametric insurance will continue to rise in 2024, as “there is no fine print in a parametric policy, which clients appreciate in these uncertain times.”
According to Hotz, the demand for parametric insurance has been “rising steadily” in recent years, and he expects this to continue in 2024.
“The three main qualities of parametric insurance are speed, flexibility in the use of payouts and transparency. There is no fine print in a parametric policy, which clients appreciate in these uncertain times,” Hotz explained.
He also observed that advances in technology and data collection mean that the parametric value proposition is “becoming ever more compelling” as monitoring and measurement of the natural world becomes ever more precise.
Hotz continued, “To meet the growing demand for fast and flexible cover, larger commercial insurance brokers now have expert teams dedicated to parametric insurance.
“Our broker partners play an important role in the product education process, and we welcome this specialization which will be one of the factors that further contributes to the growth of the parametric insurance market.”
Discussing Swiss Re Corporate Solutions’ strategy for parametric insurance, and the opportunities he sees in 2024, Hotz noted that the non-traditional product has “proven to be an effective risk transfer method” in recent natural catastrophe events, such as Hurricane Ian, the Morocco Earthquake, and the New Year’s Day Earthquake in Japan.
“Parametric insurance has been tested and the policies were behaving as expected, resulting in many potential customers taking the parametric insurance route with greater confidence,” he said.
Hotz went on, “Our strategy for parametric nat cat insurance is very steady, in that we remain one of the leading commercial parametric nat cat insurers, bringing together our unparalleled R&D capabilities, the strength of our balance sheet and the experience of more than 1,000 parametric nat cat policies issued, including many successfully handled claims.
“In 2024 we expect opportunities from all corners of the world, across the full spectrum of natural perils.”
