What Businesses Should Know About the Parametric Solutions Designed to Mitigate Risk
White Paper Summary
Hurricane season lasts from May to November, though it’s never too early to start planning for the financial exposures of an upcoming season. Increased development, asset valuation and climate change have contributed to the physical and financial impacts of hurricanes, with 2020 leaving behind 30 named storms and almost $47 billion in damages.
That puts 2020 on the books as the seventh costliest season in recent history.
Understanding hurricane vulnerabilities, not only in the immediate aftermath but also in the long-term, enables businesses to gain a holistic view of their financial risks in the event of a storm.
“As we pivot into 2021, we anticipate this will be a very crucial time for economic recovery,” said Scott Carpinteri, Senior Vice President, Innovative Risk Solutions Americas at Swiss Re Corporate Solutions.
“Organizations that suffered through 2020 due to economic setbacks that stemmed from the COVID-19 pandemic are looking to get back to normal and get back on their feet. If another series of hurricane events play out this year, it could be a huge financial impediment to the long-term sustainability of any organization,” he said.
That is why it’s crucial for every business, even those not directly in the path of a storm, to review the risks associated with hurricane season. Storms can become strong and change course in the blink of an eye, and the best risk mitigation strategy to handle such unknowns is reviewing coverage ahead of loss.
Parametric solutions are one way of doing just that.
“Parametric solutions allow a buyer to receive funds quickly to address financial disruption not necessarily linked to a physical loss caused by a storm,” said Megan Linkin, Senior Parametric Nat Cat Underwriter at Swiss Re Corporate Solutions.
Here are the top lessons learned from the 2020 hurricane season and how parametric solutions are stepping in to help curb the financial impact of growing storms.
To learn more about Swiss Re Corporate Solutions, please visit their website.