Descartes’ parametric non-damage business interruption insurance
offers valuable capacity against typhoon events that significantly impact the essential inputs of a firm and results in severe financial consequences.
Product details
Risk Covered
Indirect Financial Losses Resulting from a Typhoon
Client Profile
Organizations with an External Vulnerability to Disruption from a Typhoon
Insured Location
Client-Specified Location(s) Producing an Essential Input
Index
1-Min Maximum Sustained Wind Speed
Limit
Up to $75 Million Per Contract
case study example
Krathon’s typhoon occurred in October 2024. Its landfall led to the temporary shutdown of major ports across Taiwan. The ports play a critical role in Taiwan's export-oriented economy, handling a substantial volume of the country’s container shipments, including key exports like electronics, machinery, and petrochemicals. The temporary halt could lead to a backlog of shipments, congestion, and a ripple effect on global supply chains, potentially causing delays for international buyers.
Problem
A Western electronics company relies on exports from Taiwan for its production and requires high insurance limits to mitigate potential revenue losses from any supply disruptions.
Identified Vulnerability: Port closure in Taiwan as a result of typhoons such as Krathon would lead to the temporary shutdown of major ports across Taiwan, including Kaohsiung. The company would suffer from delays of shipments.
Solution
The solution would be a Cat-in-a-Circle Parametric Cover from Descartes, with a single circle of 75km radius. It would offer the financial freedom to protect against :
- Revenue loss from supply chain disruption
- Additional costs of finding a new supplier
- & any other indirect financial loss.
The payout for a similar event to Krathon would be 25% of the chosen aggregate limit (up to $75 Million per contract).
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