Key Challenges for the Region
Japan faces frequent and severe flooding, particularly in Kyushu, where heavy rainfall causes rivers like the Kuma to overflow, causing extensive flood damage to infrastructure and property.
Transportation networks—including railways, expressways, and bridges—are highly vulnerable, often becoming unusable during major flood events.
Traditional flood insurance policies provide limited compensation, delayed insurance payouts, and lengthy insurance claim processes, leaving operators financially strained after each disaster.
Transparent Terms
Policies are built on measurable triggers—like rainfall or temperature—so clients and their brokers know exactly when payouts occur. No fine print, no ambiguity.
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.
Fast, Predictable Payouts
Once a triggering event occurs, payment is issued quickly and automatically—no need for on-site assessments or lengthy claims processes.
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.
Japan faces significant river flood risk because its steep terrain and heavy seasonal rains often cause rivers to overflow rapidly. Such flooding frequently disrupts transportation networks, damages industrial facilities, and leads to substantial economic losses for local businesses.
Descartes’ Parametric Flood Insurance: Trigger-Based Coverage for Immediate Liquidity
Descartes Underwriting provides a parametric flood insurance solution designed to deliver fast, transparent payouts based on real-time river gauge readings. When water levels exceed pre-defined thresholds, payments are triggered automatically—no on-site damage assessment required.
case study example
Parametric Flood Solution for the Transportation Sector in Japan
In Japan, a transportation operator suffered extensive service disruption after the 2020 Kyushu Floods when record rainfall caused the Kuma River to overflow.
Problem
Flooding severely impacted the operator’s ability to provide services. In addition to direct damage to buildings, structures, vehicles, and other assets, significant losses occurred due to business interruption. Traditional flood insurance policies often failed to provide adequate insurance coverage for the diverse range of damages. Lengthy insurance claim procedures delayed access to funds, and cases frequently arose where business interruption without physical damage was excluded. Transportation operators, who must maintain drivers, vehicles, and infrastructure continuously, required rapid recovery to restore operations, but delayed payouts and limited compensation strained their financial resources.
Solution
To avoid a similar situation, the transport operator and its broker implemented parametric flood insurance with Descartes. Coverage is triggered by readings at pre-selected observation points designated by the Ministry of Land, Infrastructure, Transport and Tourism. For example, if the river water level at an observation point exceeds 2.4 meters, the operator receives prompt payment proportional to the insured limit, without requiring on-site damage assessments. This solution provides fast insurance payouts, covers property and operational losses, and ensures continuity in the face of catastrophic flooding.
Result
If the insured limit was set at ¥2 billion and the water level exceeded 2.4 meters, Descartes would deliver a 100% payout within days—no adjusters, no ambiguity. This transparent, trigger-based approach allowed the operator to restore operations rapidly, maintain essential transport services, and strengthen resilience against future flood risks.
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