Descartes’ comprehensive parametric insurance guidebook for brokers and risk managers explains the fundamentals of parametric insurance, what it is, how it works, its advantages over traditional coverage, and how brokers and risk managers can apply it across industries to close protection gaps, manage climate risks, and ensure faster recovery after disasters.

What is Parametric Insurance?

Parametric insurance, also known as index-based insurance, indemnifies clients within days based on pre-defined payout structures when a specific triggering event occurs. Unlike conventional indemnity insurance, which requires lengthy on-the-ground loss assessments to determine the exact loss value, parametric insurance speeds up the process by linking the severity of an event to the financial losses of the client upfront, along with eliminating the need for on-site visits or audits.

As a powerful tool, corporate insurance brokers and risk managers may use it to fill coverage gaps left in traditional programs or may even substitute parts of their placement altogether with parametric insurance…