Parametric insurance is becoming a powerful complement to traditional property programs, especially where high deductibles, sublimits and exclusions leave a residual gap. At Descartes, we work with brokers and clients to design data-driven covers that trigger quickly and transparently after an event, providing liquidity when it is most needed.
Below are a few real-world examples of how Descartes’ parametric solutions are supporting clients today across wind, tornado and earthquake risk.
1. Florida Wind (Hurricane) for a Dispensary Operator in Florida
Industry: Dispensary operator (retail)
Peril: Wind / hurricane
Location: Florida, USA
Limit: USD 10M
The challenge
A Florida-based dispensary operator with 40 locations throughout the state suffered damage and business interruption from Hurricane Milton, but the loss was well within their traditional Named Windstorm deductible.
The parametric solution
Descartes provided a parametric hurricane solution with tiered payouts based on wind speed to address these smaller losses, while also providing meaningful capacity for more severe scenarios.
2. Tornado Cover for a Data Center in Oklahoma
Industry: Data center
Peril: Tornado
Location: Oklahoma, USA
Limit: USD 70M
The challenge
A large data center in Oklahoma purchased parametric tornado insurance to supplement their traditional property program, which included a significant wind/hail deductible, sublimits, and other exclusionary wording.
The parametric solution
The cover pays out based on EF intensity and covers any economic loss related to the event.
3. Texas Wind (Hurricane) for a Metal Recycler in Texas
Industry: Metal recycler
Peril: Wind / hurricane
Location: Texas, USA
Limit: USD 8M
The challenge
Given the client’s class of business, loss history, and budget constraints, they had difficulty securing adequate property coverage in the traditional E&S market.
The parametric solution
Descartes designed a hurricane policy that maximized coverage for their defined budget, providing important balance sheet protection in an extreme event scenario.
4. Earthquake (PGA) for a Luxury Resort in California
Industry: Hospitality (luxury resort)
Peril: Earthquake
Location: California, USA
Limit: USD 5M
The challenge
The client’s traditional property program included USD 5M of earthquake coverage, but they wanted additional coverage for intense earthquake events.
The parametric solution
Descartes structured an earthquake cover that pays based on Peak Ground Acceleration (PGA) at the insured site. The policy was designed to only respond to extreme event scenarios, allowing the traditional property program to cover any losses from less intense tremors.
What these success stories have in common
- They fill gaps created by traditional programs: high deductibles, sublimits, exclusions, and limited capacity.
- They provide meaningful, pre-agreed capacity for defined severe scenarios, while also addressing “below deductible” impacts where relevant.
- They are built on objective triggers (e.g., wind speed, EF intensity, PGA), supporting transparency and faster access to funds after a covered event.
- They are tailored to the client’s exposure and budget, from multi-location retail portfolios to single high-value sites.
FAQ
What is parametric insurance?
Parametric insurance provides a payout when a predefined, measurable trigger is met (for example wind speed, tornado intensity, or ground shaking), rather than relying on a traditional loss adjustment process.
Why do clients add parametric cover on top of traditional property insurance?
Parametric solutions can supplement traditional programs when clients face large deductibles, exclusions, sublimits, or limited capacity, and want additional protection for defined scenarios.
What kinds of losses can parametric cover address?
Depending on the structure, parametric insurance can support a wide range of economic impacts, such as damage, business interruption, extra expense, or other event-related costs.
How are payouts determined?
Payouts are typically linked to the severity of the trigger and can be structured as tiered payouts (e.g., increasing wind speed producing increasing payout) or based on a parameter threshold.
How quickly can a parametric policy pay?
Because payouts are based on objective event data and predefined terms, parametric covers are designed to enable faster access to funds once the trigger is confirmed, compared with traditional claims processes.
