Parametric insurance, or index-based insurance, is a type of coverage where an insurance company agrees to pay a predetermined sum if a specific measurable event occurs. The payout is contingent upon the event's intensity meeting or exceeding a pre-established parameter or index, such as wind speed, rainfall, or earthquake magnitude. This innovative approach allows for quicker payouts and reduces the need for traditional claims processes, making it a valuable option for those at risk of natural disasters.
Parametric insurance, or index-based insurance, is a type of coverage where an insurance company agrees to pay a predetermined sum if a specific measurable event occurs. The payout is contingent upon the event's intensity meeting or exceeding a pre-established parameter or index, such as wind speed, rainfall, or earthquake magnitude. This innovative approach allows for quicker payouts and reduces the need for traditional claims processes, making it a valuable option for those at risk of natural disasters.
•It involves a predetermined payout for specific measurable events.
•Payouts occur when the event's intensity meets or exceeds a set parameter.
•Examples of parameters include wind speed, rainfall, and earthquake magnitude.
•This type of insurance allows for faster payouts and simplifies the claims process.