Global reinsurer Swiss Re has emphasised that parametric flood solutions relying on data from multiple sources, including advanced sensors, will be key to their success, improving reliability, reducing basis risk, and strengthening confidence.
Flood risk is among the most prevalent weather-related hazards, impacting nearly one-third of the global population. However, despite this, roughly 80% of flood losses remain uninsured, according to the Swiss Re Institute.
To address this protection gap, parametric flood insurance is gaining traction in both emerging and developed markets.
Instead of potentially time-consuming loss assessments, parametric insurance offers rapid payouts triggered automatically when measurable flood conditions are met.
Swiss Re noted that an array of advanced data sources has transformed how flood risk can be measured, from IoT flood sensors and satellite imagery to remote sensing and high-resolution flood models.
However, the reinsurer warned that relying on a single data source may create new vulnerabilities. Even approaches that appear promising may not work on their own, particularly if they prove too costly to deploy.
To address this, a new publication from Swiss Re Public Sector Solutions explores how a blend of data inputs could help shape the future of parametric flood protection, improving reliability and strengthening confidence in these risk-transfer products.
