Parametric re/insurance solutions can be a “beacon” in a challenging market environment as they can provide clients an alternative to traditional products, alongside catastrophe bonds, industry-loss warranties (ILW’s) and retrocession, Augment Risk believes.
2024 can see several risks on the horizon that lend themselves to parametric placements, the broker explains, particularly the upcoming transition from El Nino to LaNina which, coupled with warming oceans, may lead to a particularly active Atlantic storm season.
As the world faces these challenges, Augment Risk’s goal is to revolutionise reinsurance with alternative solutions such as parametrics and a client-focused approach to broking.
Last year, the reinsurance broker launched a dedicated parametric risk transfer division, led by former Aon and Inver Re weather and parametrics specialist Kurt Cripps.
“Augment Risk’s Global Parametric Specialty is championing the progression of parametric reinsurance with its transformative approach, transitioning from indemnity-based products to parametric, driven by improved data and a desire for more efficient risk and capital management,” the company stated.
Parametric solutions are still being considered a relatively “new way of purchasing reinsurance”, the broker notes, but are “designed to enhance the traditional client operating model through a fast and unrivaled claims recovery process, bringing a new option for peak catastrophe risk.”
Currently, parametric coverage has never been a more viable and commercial alternative, Augment Risk highlighted; noting that, compared to traditional reinsurance solutions, it provides clients the comfort that cat risks are managed most efficiently and cost-effectively.
This is mainly due to its ability to place policies on a single risk/single peril basis, it can also cover many risks within a portfolio. Additionally, the timeliness of the claims process is beneficial to both the risk buyer and seller, the broker explained.
Augment Risk believes that its alternative products such as parametric reinsurance, on top of diversifying reinsurance capital, can help clients through challenging periods.
Stating: “Parametric reinsurance emerges as a beacon in such challenging market conditions, providing clients with a genuine alternative to traditional products.Clients seek coverage through a dislocated market (cat bonds, Retro, and ILWs) and we see parametric reinsurance as a genuine alternative and a part of a buyer’s tool kit.
The broker concluded: “As we navigate the complexities of the reinsurance industry, Augment Risk emerges as a pioneer in the realm of parametric reinsurance. We are poised to lead the industry toward a future where parametric products play a central role in risk transfer.
“In the face of market headwinds, the timeliness, transparency, and flexibility offered by Augment Risk’s parametric solutions position us to deliver success for our clients in an ever-evolving landscape.”
