Parametric Insurance

9 months ago

Insurance Glossary Team

1 minute

Plain English Definition: A type of insurance that pays out based on predetermined parameters or triggers, rather than actual losses.

What Parametric Insurance really means for someone with an insurance policy

Parametric insurance provides a payout when specific conditions are met, such as a certain level of rainfall or earthquake magnitude, regardless of the actual damages.

Parametric Insurance Real World Examples

A crop insurance policy that pays out if rainfall drops below a specified level.
An earthquake policy triggering a payout when seismic activity exceeds a set magnitude.
Travel insurance offering a fixed payout for flight delays beyond a certain threshold.