Parametric Insurance for the Construction Industry

The Solutions We Provide

Why Parametric Works 

✓ Fast payouts. Confirmed in days and paid in weeks, with no on-site loss adjustment, providing critical liquidity during the post-event recovery period

✓ Closes critical protection gaps. From weather-driven delays without physical damage to DSU costs, liquidated damages, high deductibles and sub-limits, parametric can address exposures that traditional builders risk programs leave unresolved

✓ Flexible capital. Payout proceeds are not tied to specific line items and can be allocated to liquidated damages, equipment costs, financing obligations or other project recovery needs

✓ Adapts to the project lifecycle. Variable limits scale with construction progress and coverage can be extended for multi-year or multi-phase projects

✓ Complements traditional builders risk. Parametric cover can work alongside existing programs in any market environment, filling structural gaps rather than replacing capacity

FAQ

What types of events can be covered?

Both NatCat events causing physical damage (earthquakes, cyclones, hail, floods) and adverse weather conditions affecting construction activity (excess rainfall, extreme temperatures, high winds) can be covered. Triggers are calibrated to the specific project location and risk profile.

Is this a replacement for traditional builders risk insurance?

Not exclusively. Parametric insurance can be complementary and is designed to work alongside traditional programs and address specific protection gaps -- particularly delay-related losses, high deductibles, and excluded perils.

Can parametric cover earthquake risk when traditional builders risk programs exclude it? 

Yes. In markets such as Japan, Australia, or New Zealand, traditional builders risk programs may exclude, significantly restrict or sublimit earthquake coverage. Parametric earthquake cover can be arranged as a standalone policy, covering both direct physical damage and profit losses from delayed project completion, even where no all-risk program is in place. 

How are weather delays measured?

Triggers are based on objective third-party data, typically from meteorological stations, satellite sources, or gridded weather datasets rather than on contractor records or self-reported downtime. The specific data source, trigger threshold, and measurement period are all agreed upfront at policy inception. Thresholds are calibrated against historical weather data to ensure that trigger levels are meaningful and that expected payouts are consistent with the client's actual risk exposure.

Can coverage limits adjust as the project progresses?

Yes. Parametric structures can be designed with limits that increase in line with construction progress, ensuring coverage remains proportionate to actual project value throughout the lifecycle.

Can policies be structured for longer project durations or LTAs?

Yes. Parametric cover can be structured for multiyear project durations or under long-term agreements, aligning protection with the full construction timeline rather than a single annual policy period. This can be particularly useful for large infrastructure, energy, or real estate projects where exposure evolves over several years and lenders or developers need continuity of coverage across the project lifecycle. 

Can this cover multiple project sites?

Yes. Parametric solutions can be structured for a single location or across multiple sites within a single policy.

What information is needed to get a quote?

Typically: project location (address or GPS coordinates), project type and contract value, construction timeline, loss history, and desired policy limit. 

What is basis risk in parametric insurance, and how should it be understood?

Basis risk is the gap between a client's actual loss and the payout triggered by a predefined index. It exists in all insurance products. In traditional policies it is hidden in deductibles, exclusions, and claims processes. In parametric insurance, it is explicit and measurable upfront, and can be reduced through careful index selection and client-specific calibration.

Is parametric insurance expensive?

Not when you look at the full picture. Pricing is risk-based rather than market-driven, which means it remains stable and predictable at renewal. There are no hidden deductibles or coverage carve-outs discovered at claims time: what is agreed upfront is what gets paid. And when a claim is triggered, it pays fast, providing liquidity at exactly the moment it is needed most.

Does parametric still make sense in a softening market?

Yes, because the gaps it addresses are structural, not cyclical. Weather delay coverage and DSU protection are exposures that traditional builders risk policies do not cover regardless of rate movements. High NatCat deductibles and sub-limits may shift over a market cycle, but at this stage of the softening market there have been no meaningful changes to these structural features. Parametric buys certainty of timing and coverage and that value is independent of the pricing environment.