Key Challenges for the Region:
High exposure to multi-fault seismic activity across the Philippine archipelago
Correlated losses across property, SME, and commercial portfolios following large earthquakes
Delays in traditional reinsurance recoveries due to on-site assessments and loss validation
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.
The Philippines is one of the most seismically active regions in the world, where offshore and onshore earthquakes can trigger widespread disruption. Even when physical damage is localized, the knock-on effects on infrastructure, business interruption, and supply chains can create nationwide financial strain.
Descartes’ Parametric Earthquake Reinsurance: Fault-in-a-Box for Rapid Liquidity
Descartes’ parametric earthquake reinsurance provides cedents with fast, objective financial protection against large seismic events. Based on independently verified parameters such as magnitude, depth, and distance to the epicenter, Fault-in-a-Box delivers transparent payouts within days, strengthening capital efficiency and post-event resilience.
case study example
Parametric Earthquake Solution for Reinsurance in the Philippines
In October 2025, a Philippine cedent with nationwide exposures faced significant stress following a major offshore earthquake sequence.
Problem
A magnitude 7.4 earthquake struck offshore Davao Oriental on October 10, 2025, followed minutes later by a magnitude 6.8 aftershock. While direct physical damage was concentrated near the epicenter, the event caused widespread disruption across Mindanao, Visayas, and Luzon. Correlated business interruption, infrastructure impacts, and claims delays placed liquidity pressure on the cedent. Traditional reinsurance recoveries were slowed by the need for loss assessments, highlighting gaps in timely capital support for moderate but widespread earthquake losses.
Solution
To address this exposure, the cedent integrated Descartes’ Fault-in-a-Box parametric earthquake reinsurance into its program. The cover triggers automatically based on objective seismic parameters, providing immediate and transparent financial protection against large-magnitude earthquakes across the Philippines.
Result
In a scenario similar to the 2025 Davao Oriental earthquake (Magnitude 7.4), the structure would trigger a 60% payout under a USD 10 million limit, resulting in a USD 6 million payout within days, delivering critical post-event liquidity and reinforcing the cedent’s resilience against future seismic 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.
