Key Challenges for the Region
Low Take-Up: Fewer than 15% of California homeowners carry earthquake coverage, so even moderate quakes leave repair costs largely uninsured.
High Deductibles: California Earthquake Authority policies carry deductibles of 5% to 25% of insured value, so most moderate losses never reach the insurer and stay with condo associations and their owners.
Special Assessments: When reserves fall short, condo association boards must seek member approval for special assessments, delaying repairs and adding financial pressure on owners.
Key benefits of parametric insurance
Transparent Terms
Policies are built on measurable triggers so clients and 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.
Descartes' Parametric Earthquake Insurance: Fast Funds to Close the Deductible Gap
Descartes' parametric insurance pays a pre-agreed amount based on the Peak Ground Acceleration (PGA) measured at the insured location. No on-site loss assessment is needed, so funds arrive within days or weeks and can cover any type of financial loss. Paired with a traditional policy, it buys down high deductibles and helps condo associations avoid costly special assessments.
case study example
Parametric Earthquake Solution for California Condo Associations
In July 2019, the Ridgecrest earthquake sequence (M6.4 and M7.1) shook Kern County, leaving many property owners with repair bills their insurance did not cover.
Problem
A 120-unit Condominium Owners Association (COA) in Ridgecrest held a master earthquake policy insuring $30M of building value with a 15% deductible: a $4.5M retention before any claim is paid.
The 2019 shaking cracked stucco facades and damaged ceilings, shared utilities, and common areas, leaving a $2.5M repair bill. Because the loss fell below the deductible, the traditional policy paid nothing.
With reserves unable to cover the gap, the board had to seek member approval for a special assessment of approximately $20,800 per unit, delaying repairs and adding costs for owners.
Solution
Descartes' parametric earthquake solution complements traditional policies with a pre-agreed payout based on the Peak Ground Acceleration (PGA) measured at the insured location. No on-site loss assessment is needed, and funds can cover any financial loss.
Result
With a $4.5M limit, a PGA of 0.30g triggers 35% of the limit, a $1.575M payout within days or
weeks, cutting the assessment to ~$7,700 per unit.
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.
