What Is Parametric Insurance?
Parametric insurance (i.e. index-based insurance) indemnifies clients within days based on pre-defined payout structures when a specific triggering event occurs. Unlike conventional insurance, parametrics speed up the process by linking the severity of an event to the financial losses upfront, while eliminating the need for on-site visits or audits.
What Are The Benefits?
Transparent Terms
Policies are built on measurable triggers—like rainfall or temperature—so clients & their brokers know exactly when payouts occur. No fine print, no ambiguity.
Fast, Predictable Payouts
Once a triggering event occurs, payment is issued quickly and automatically—no need for on-site assessments or lengthy claims processes.
Customized Coverage
We work closely with brokers to build each policy around the client’s specific risk and budget profile, providing protection where traditional insurance often cannot.
Flexible Use of Funds
Payouts are based on the severity of natural events occurring, not solely on proven losses, giving clients immediate access to funds and empowering them to cover any type of financial loss, not just for physical damage.
How Does It Complement Traditional Insurance?
Traditional insurance isn't built for an ever evolving risk landscape. That’s where parametric insurance steps in.
Here’s how it compares:
Define the Index
Choose the best index structure to meet premium budget, coverage gap, and risk appetite—in collaboration with the insurance broker and Descartes.
Monitor in Real Time
Descartes continuously monitors events through satellite data, sensors, and global hazard networks—powered by top-tier data providers.
Natural Event Occurs
Once the threshold of the pre-agreed index is met, the payout is initiated based on the policy terms— ensuring certainty and reliability.
Get Paid Fast
Funds are typically disbursed within 5–10 business days—with no need for on-site claims adjustment.
When to Use Parametric Insurance?
Recovery speed matters
You need access to funds within days—not weeks or months—to stay operational after a major event.
Insurance capacity is limited
Wildfire, earthquake, hurricane and flood zones often face reduced or unavailable coverage in traditional markets.
Deductibles are too high
Parametric payouts can help fill in the financial gap below large deductibles.
The loss is hard to prove or excluded
Some disruptions—like a cyclone that cuts access to a hotel—cause revenue loss without physical damage.
Coverage in remote or data-sparse areas
Parametric triggers use independent satellite and sensor data, not on-site assessments.
Bringing Financial Security To Various Industries
Agriculture
Stabilize income through drought, flood, and extreme heat
Hospitality
Recover quickly from weather-driven closures or access loss
Energy & Renewables
Hedge against performance loss from weather variability
Construction
Minimize delays and cost overruns from natural hazards
Retail
Maintain cash flow after climate-related disruptions
Public Sector
Fund rapid response and disaster recovery without delays
Financial Institutions
Structured climate-linked risk solutions
Manufacturing
Protect operations from utility failures or natural disaster downtime
Trusted by Brokers. Backed by Results.
At Descartes, our primary focus is parametric insurance. With billions in capacity deployed, hundreds of partners worldwide, and a growing suite of innovative products, we deliver protection that brokers and clients can count on.
What Brokers Say About Us
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“The underwriting team is very good to deal with. Upfront, honest and thoughtful. They also articulate the process required for them to provide best and optimal terms for our clients.”
Australia
Account Manager at a leading insurance broker
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“Very helpful with established perils and willing to consider novel solutions. Good communication and service time.”
United kingdom
Parametric Lead at a large reinsurance broker
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"Good service and always able to support."
United States
Vice President at a Tier 1 reinsurance broker
Contact Us
Whether you're quoting a complex risk, looking to break into new markets, or just curious about parametric insurance, our team is here to help you win. Reach out and we will get back to you within 48 hours.
FAQ
What information do I need to get a parametric quote?
To provide a quote, we require the insured location (address, GPS coordinates, or shapefiles), the perils to be covered, the desired risk period, the requested Sum Insured, and details of any past losses from those perils, including associated loss amounts.
How fast can I get a quote?
Turnaround times vary depending on the peril. For tropical cyclone and earthquake, quotes can often be provided within a week. More complex solutions, such as flood, may take longer. We encourage brokers to reach out as early as possible to ensure the parametric structure complements the client’s traditional program and needs. Please note that quotes may go through several iterations, as parametric terms are often refined beyond the initial proposal.
How do payouts work?
First, the client notifies their broker and Descartes of a loss. Descartes collects the final data from the certification agent post event ensuring the most accurate level of information. Using the collected data, Descartes creates a report of the maximum monetary amount to be recovered as per the policy structure. Claims payment issued as defined within the policy, following receipt of a short Declaration of Loss statement.
Can parametric insurance be used alongside traditional insurance?
As natural catastrophe losses continue to rise, parametric insurance can complement traditional programs by addressing coverage gaps through buy-downs, top-ups, filling exclusions, and extending protection to cover full financial exposure, including non-damage business interruption (NDBI).
Do you cover SME clients or only large corporations?
We serve a wide range of public and private entities, from small businesses to large corporations. Since each policy is custom-designed by our team of underwriters and climate scientists, a minimum premium of $50,000 is usually applied.
In which countries or regions is coverage available?
We operate on a global scale, collaborating with more than 300 broker partners across the world.
Which perils does Descartes cover?
We provide coverage for a wide range of perils and for any industry sector, including but not limited to hurricanes (cyclones/typhoons), earthquakes, floods, renewable energy yield, hail, tornadoes, wildfires, agricultural yield, frost, excess rainfall, wave height, drought.
What kind of losses can Descartes cover?
Our solutions protect against both direct and indirect financial losses arising from natural catastrophes and extreme weather events, including third-party losses from investments and non-damage business interruption.