Commercial risk transfer and insurance solutions provider Swiss Re Corporate Solutions, a division of the global reinsurance firm, has launched a parametric tsunami derivative solution for organisations based in Japan.
The product provides a pre-agreed amount within 40 days after arrival based on the height of the tsunami, as recorded and validated by the Japan Meteorological Agency (JMA).
Swiss Re says this new derivative addresses an insurance protection gap created by insufficient tsunami coverage from conventional indemnity solutions, especially for infrastructure damage, clean-up and recovery expenses.
“Earthquakes and ensuing tsunamis have devastated many areas of Japan. With this tsunami derivative, we’re helping corporations to become more resilient,” explained Koichi Fujita, Originator at Swiss Re Corporate Solutions.
The new product offers beneficiaries a range of coverage limits from between $30 and $100 million; available coverages and pay-out options are structured from a starting tsunami height of three metres and above.
“Our new product provides financial relief that can help organizations recover and minimize business disruption following a tsunami,” added Fujita.
“Pay-outs can be made extremely quickly, irrespective of actual losses and without any proof of loss. Once we receive the record from the JMA that states the tsunami height is above a pre-agreed level, the pay-out is triggered.”
Regions of Japan have experienced widespread devastation from tsunamis in recent years; Swiss Re’s sigma publication estimated the 2011 Tōhoku earthquake alone to have caused an economic loss of approximately $210 billion.