European reinsurer Munich Re has announced the formation of a global parametric team focusing on natural catastrophe risk transfer solutions, bringing together experienced colleagues from around the world.
The market for parametric solutions is highly dynamic and still gaining pace. It complements traditional insurance by providing post-catastrophe liquidity and coverage for otherwise uninsurable risks.
Parametric claims are peril-based and recoveries are determined quickly, which makes this solution an efficient tool for covering business interruption and loss of income.
This in turn helps to improve resilience of public bodies, corporations and financial institutions, both in low-income and highly developed countries, Munich Re explains.
For more than 20 years Munich Re has offered a wide range of insurance-linked securitizations (ILS), weather-related and parametric natural catastrophe (NatCat) solutions.
The market for parametric solutions “is very close to its core: Significant risk-taking capacity and risk modelling capabilities, a deep knowledge of the risks and an unparalleled data base as well as a global presence,” the reinsurer states.
Adding: “This will be enhanced by the use of AI, IoT and remote sensing technologies to develop customised risk transfer solutions.”
The newly established unit will continue the excellent collaboration with Munich Re’s facultative and corporate client business and, supported by a broader community of experts, will bring together a renowned team of specialists in product development, catastrophe risk modelling, underwriting and structuring, with decades of experience in advising on the success of complex transactions around the world.
August Pröbstl, Head of Capital Partners at Munich Re: “The unique value proposition of parametric risk transfer has attracted the attention of many decision-makers in the private and public sectors, contributing to a steady increase in insurance capacity through parametric solutions.
“As a result, Munich Re’s ambition is to bring together its parametric expertise in a dedicated unit and grow its share of parametric business, while helping to reduce protection gaps and enable its clients to become financially more resilient to natural catastrophe risks”.
Rene Mück, Global Head of Parametric NatCat, added: “While the initial focus will be on natural catastrophe risks, especially in an era of climate change, close coordination and collaboration with Munich Re units offering weather derivatives, corporate parametric solutions along the agricultural and other industrial value chains, as well as epidemic risk solutions, will enable us to offer our clients a full range of parametric risk transfer solutions.
“We are ready and very much look forward to further enhancing our collaboration with our clients and business partners in the provision of parametric risk transfer solutions.
