Parametric Flood Insurance for Real Estate in Australia

The Challenges of Traditional Flood Insurance

Capacity restrictions: Businesses may struggle to find adequate capacity as commercial insurers continue to leave the market.

Limited resources: More clients are starting to insure themselves due to a decrease in capacity.

Significant delays: Disputes over certain definitions (e.g., flood definitions – pluvial/fluvial, property contents, inventory, etc.) may cause delays in
payments.

Key benefits of parametric insurance

Added Transparency

With pre-agreed parameters and payout structures eliminating ambiguity

Bespoke Policies

Custom covers for one or multiple locations adapted to the client’s existing coverage (e.g., traditional insurance, captive)

Swift Payouts

In a matter of days or weeks after a loss event, no longer requiring on-site loss assessment

Financial Freedom

Covering any type of direct or indirect financial losses resulting from the event

Fluvial (river) flooding, one of the two major types of flooding, is a result of excessive rain causing water levels at local rivers to rise and overflow. This type of flooding can lead to property damage, a halt in operations, and other non-damage business interruptions.

Descartes’ Parametric River Gauge Flood Insurance: Custom, transparent coverage to help clients remain resilient

Thanks to the expertise and technology behind Descartes’ River Gauge Flood Solution, water levels exceeding a predefined threshold at a preselected water gauge trigger quick indemnity amid a flood event, allowing businesses to mitigate financial losses and maintain the necessary liquidity to stay resilient.

case study example

Parametric River Gauge Flood Solution for Brisbane, Australia

Brisbane is one of the most at-risk locations in Australia for severe flooding.

Problem

A real estate owner located along the Brisbane River in Queensland, Australia, had suffered losses during the 2011 and 2022 floods. Hard market conditions and past losses left them facing significant spikes in rates, so they opted to be fully self-insured in recent years.

Solution

With awareness of their on-going exposure, the client and their broker decided to transfer their flood risk to a river gauge parametric policy tailored to their specific needs and budget.

Result

If repeated, with floodwaters surpassing the pre-defined policy threshold of five metres, they would receive a rapid insurance payout of A$25 million to cover repair costs and bridge the business interruption impacts on their balance sheet.