The perfect fit of captive programs and parametrics
As captives are not part of traditional commercial insurers, captives are considered a part of what is often called the "alternative market," or "alternative risk transfer” (ART) market. As a risk management tool rising in unprecedented popularity, captives allow for more complete insurance coverage, bringing financial benefits to holding companies and its business units, and complement the risk management strategy in proven ways.
Addressing the upwards trend of captive insurance programs, parametric emerges alongside them as a perfect fit to complement the risk placement. Guaranteeing liquidity via swift payouts following a qualifying loss event, parametric insurance provides financial certainty along with innovative P&L and balance sheet protection, applicable to any financial loss, including non-damage business interruptions, loss of revenue, contingent BI, and more.
For a wide range of risks such as tropical cyclones, earthquakes, flooding, tornado, hail, or extreme temperatures, our parametric solutions can support a captive in two fundamental ways.
- Captive Protection
- Captive Fronting
Assess
We assess and evaluate the captive's risk of a natural event occurring by leveraging our proprietary risk models.
Customize
Design a customized cover, fit to the captive's needs, in which payout structures are indexed according to the specific parameters of the risk.
Monitor
Upon policy inception we monitor the captive's insured location(s) to determine whether a qualifying event has occurred.
Payout
Captive receives a payout within days of reporting a loss, facilitating the financial recovery and preserving cash reserves while reliably disbursing cash to business units.
Our parametric approach to captive insurance solutions
In full collaboration with the captive managers & their (re)insurance brokers, we define the specific named weather risk and location(s) hampering the captive in the form of underinsurance or inefficient risk placement. Leveraging our proprietary models, Descartes creates a tailored parametric insurance solution for the captive to mitigate direct and indirect financial losses from the specific named event.
Within all parametric products from Descartes, our swift indemnification process requires no loss adjustment, enabling the captive to have full risk understanding and payout certainty within days of the event. This agility enables full financial recovery, transparent financial reporting, and straight-forward financial flows to any affected business unit attached to the captive.
Our parametric approach empowers the captive’s coverage of any direct and indirect financial loss resulting from extreme weather risks and natural events. Benefiting from parametric underwriting rigour and specific bespoke risk methodology, captive managers gain unparalleled risk insights into the natural perils most affecting their captive program. Even incorporating guaranteed structures, our parametric insurance solutions allow a captive to design a wide “safety net” cover for any type of natural event occurring.
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