Helped by the capabilities of solutions such as Moody’s RMS’ HWind, parametric insurance is being leveraged more broadly to the benefit of the entire value chain, according to Callum Higgins, Moody’s RMS, and Martin Hotz, Swiss Re Corporate Solutions.
Our insurance-linked securities (ILS) focused sister publication, Artemis, recently spoke with Higgins and Hotz in a video interview, to discuss advanced risk modelling tools and their use in delivering parametric solutions.
Higgins is a product manager at Moody’s RMS, and Hotz currently serves as Head of Parametric Nat Cat at Swiss Re Corporate Solutions, the commercial insurance arm of global re/insurance group Swiss Re.
“We see increased uptake and also increased interest, and we also see that parametric insurance is increasingly leaving the niche it once was sitting in, it’s being adopted more broadly,” said Hotz.
“Also, transactions are happening at scale for a larger set of perils across all continents. So, it creates not only more trust on the protection buyer side, but also along the entire value-chain, that capacity is being provided at levels which are more meaningful,” he added.
As well as commenting on some use-cases for Moody’s RMS’ HWind product, Higgins explained that last year’s hurricane Ian in particular was a good example of some of its advantages.
>> Learn more about using Moody’s RMS HWind as a Trigger for Parametric Insurance Contracts <<
“It was a bit unique in terms of having the strongest wind speeds out on the left hand side of the storm, which is quite unusual for a North Atlantic hurricane,” said Higgins.
“But with HWind being based on the observations that were available, the footprint was able to capture that unique feature of the storm and meant that any policyholders who were sitting out in that location out to the left hand side of the storm were getting the payouts that they were entitled to for the wind speeds that were experienced, which might not have been captured using other sorts of wind field models to be able to represent the storm,” he added.
Watch the full video for more insights into parametric insurance and risk transfer, as well as the role of models and real-time data in parametric triggers.
The full video interview is embedded below and can also be viewed in full, along with previous Artemis Live video interviews, over on the Artemis YouTube channel.
You can also listen to audio versions of our interviews by subscribing to the Artemis Live podcast here.
All of the Artemis Live video interviews have a focus on reinsurance, ILS and the efficiency of risk transfer and can be accessed directly from the YouTube Channel.
