Key Challenges for the Region
High Tornado Exposure in Texas: Tornadoes are frequent and severe in North Texas, posing a significant threat to mission-critical facilities like data centers that require uninterrupted power, cooling, and connectivity.
Coverage Gaps in Traditional Insurance: Standard property and business interruption insurance often carries high deductibles, sub-limits, or exclusions for tornado risk — leaving major liquidity gaps when rapid recovery is crucial.
Operational Continuity Risks: Extended downtime from tornado events risks SLA breaches, revenue loss, reputational damage, and high remediation costs for hyperscale operators.
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.
Descartes’ Parametric Tornado Insurance: EF Scale-Based Protection
Using the Enhanced Fujita (EF) Scale as the parametric trigger, Descartes’ solution delivers predefined payouts based on tornado intensity at the insured location. This structure eliminates the delays and uncertainties associated with traditional claims and ensures rapid access to capital in the critical hours and days after a tornado event.
case study example
Data Center Tornado Risk: Site-Specific Parametric Solution
In North Texas, a hyperscale data center identified a critical exposure where traditional coverage was insufficient to ensure rapid financial recovery after a tornado.
Problem
The client’s property insurance had insufficient sub-limits for tornado damage, and traditional business interruption coverage faced lengthy claim assessments — risking extended outages and potential SLA penalties. Rapid liquidity was essential to protect uptime, contractual obligations, and financial stability.
Solution
Descartes Underwriting worked with the client to implement a site-specific parametric tornado insurance cover. The trigger was defined using the Enhanced Fujita (EF) Scale at the data center’s geographic coordinates, with predefined payout levels for each tornado intensity band.
Result
Under the parametric structure:
- An EF2 tornado event would trigger a $42M payout (60% of a $70M limit), available within days of event confirmation.
- Funds could be deployed immediately for operational continuity, infrastructure repairs, SLA obligations, and unplanned costs.
This rapid liquidity reduces reliance on slow indemnity claims and strengthens resilience against future tornado events.
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.
