Key Challenges for the Region
Frequent hurricane exposure along the US Gulf Coast
Immediate post-event costs (debris removal, emergency repairs, contractor mobilization)
Delays in traditional insurance payouts creating short-term liquidity gaps
Key benefits of parametric insurance
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.
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.
Hurricanes regularly impact coastal resorts in the US, generating significant immediate costs while traditional insurance payouts can take months. This creates a critical liquidity gap during the first days following an event, when rapid response is essential to stabilize operations.
Descartes’ Parametric Hurricane Liquidity Solution: Rapid Protection Against Hurricane-Driven Losses
Descartes’ parametric hurricane solution provides fast and transparent payouts based on hurricane intensity and proximity. By removing the need for loss adjustment, it ensures rapid access to capital to fund urgent recovery actions.
Key Benefits
✔ Immediate liquidity when it matters: Provides capital during the first days following a hurricane
✔ Operational resilience: Allows hotels & resorts to fund emergency repairs and stabilize operations rapidly
✔ Covers the BI waiting period: Helps offset the financial impact during the typical 72-hour BI deductible
✔ Complementarity with existing programs: Provides liquidity before traditional claims payments are finalized
case study example
Parametric Hurricane Liquidity Solution for a Coastal Resort in Louisiana
Hotels across the US Gulf Coast are regularly exposed to hurricane activity. While traditional PDBI insurance covers against major losses, it is primarily designed to finance longer-term reconstruction costs and business interruption. However, the days and weeks following a hurricane are critical, as hotels must rapidly mobilize resources to stabilize properties and begin recovery operations. After a hurricane, hospitality assets typically incur significant emergency response costs, including debris removal and site clearing, temporary repairs to prevent further damage, as well as contractor mobilization and the implementation of safety measures. At the same time, traditional insurance programs often involve claims adjustment processes that may take months, property deductibles that must be borne by the insured, and business interruption waiting periods, typically involving a 72-hour deductible. As a result, resorts may face a short-term liquidity gap immediately after a hurricane, requiring rapid access to capital.
Problem
A large casino resort in Lake Charles was severely impacted in August 2020 by Hurricane Laura, a Cat 4 hurricane that caused severe damage across the region.
While traditional property insurance covered major losses, the resort faced immediate operational challenges, including securing liquidity to fund debris removal, emergency repairs and initial stabilization measures.
As insurance payouts took months, the resort ultimately relied on short-term credit facility to fund emergency response.
Solution
Descartes structured a Parametric Hurricane Emergency Liquidity Cover designed to provide the resort with rapid liquidity immediately after a new hurricane event.
The coverage is triggered by hurricane Saffir-Simpson category and proximity within a predefined radius around the resort.
Once the predefined trigger is met, a parametric payout is validated within days, providing capital to fund immediate recovery measures and avoid the liquidity constraints
experienced in 2020. As the estimated funding requirement was around $5min 2020, the coverage limit was set at that level.
Unlike traditional insurance claims, the payout does not depend on loss adjustment and can be used flexibly to fund urgent response and stabilization costs.
Result
By receiving the payout just 15 days after the hurricane, the resort secured immediate liquidity necessary for urgent repairs. This rapid infusion of capital allowed for a
reopening within weeks, significantly curbing business interruption losses. While the traditional indemnity policy provided the substantial funds required for full reconstruction months later, the parametric trigger served as a vital bridge for operational continuity.
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