Addressing Hurricane Risk in North America
Hurricanes remain one of the most severe peak perils in North America, capable of driving outsized losses despite year-to-year variability in landfalls. Natural catastrophes generated $260 billion in global economic losses in 2025, with $127 billion insured, and the United States alone accounted for approximately 81% of global insured losses—underscoring the scale and concentration of risk in the region.
Even in a year without major U.S. hurricane landfalls, a single Atlantic storm can cause significant disruption: Hurricane Melissa resulted in approximately $11 billion in economic losses and became the costliest hurricane in Jamaica's history at nearly $9 billion, equivalent to over 40% of the nation's GDP. This highlights the severe risk hurricanes continue to pose across North America and the wider Atlantic basin, regardless of how active a given season is.
As organizations seek greater resilience against hurricane risk, parametric insurance provides additional capacity and rapid liquidity, helping close protection gaps left by traditional insurance programs.
How our parametric hurricane cover works
Descartes' parametric hurricane insurance leverages near-real-time hurricane track and wind-speed data to monitor hurricane activity around insured locations. Coverage can be structured using either a proximity-based approach, which measures a storm's distance from the insured location and its intensity, or a location-specific wind speed approach, which measures sustained wind speed directly at the insured location. Payouts are determined according to pre-agreed thresholds and payout structures, eliminating lengthy claims adjustment processes and providing rapid financial support after a qualifying event.
Feature | Traditional insurance | Descartes’ parametric |
Claims & loss adjustment | Loss assessed on-site. Subjective, complex, open to dispute. | Triggered by independent third-party data. Objective and transparent. |
Payout timeline | Months, sometimes years, of adjustment. | Days to weeks after the event. |
Use of funds | Usually restricted to repairing physical assets. | Flexible. Covers any financial loss, including non-damage business interruption. |
Coverage | Off-the-shelf, limited room to customize. | Tailored to your exposure and budget. |
Risk period | Annual or long-term agreement. | Flexible: short-term, annual, or long-term. |
Where a parametric hurricane layer fits
Parametric is most powerful as a complement to your existing program. In today's market, it allows organizations to reinvest premium savings into closing the structural gaps a traditional policy leaves open.
The most common ways clients put it to work:
- Buy down a high deductible: reduce retained exposure from named windstorm deductibles that often remain significant even after moderate hurricane losses.
- Top up a sublimit: secure additional hurricane capacity where traditional property programs provide insufficient protection.
- Cover non-damage business interruption: protect against lost revenue from evacuation orders, port closures, tourism disruption, utility outages, and operational downtime.
- Secure immediate liquidity: access rapid capital to support emergency response, payroll, repairs, cleanup costs, and business continuity.
- Wrap an exclusion: address hurricane-related exposures that may be excluded or only partially covered under traditional policies.
Covered Industries
Energy & Renewables
Hurricane winds damage generation assets, disrupt transmission, and delay power restoration.
Retail & Consumer Goods
Store closures, supply chain disruption, and reduced customer traffic impact retail operations.
Financial Institutions
Branch closures, power outages, and business disruption affect financial services and operations.
Hospitality
Hurricanes cause closures, canceled bookings, evacuations, and prolonged reconstruction downtime.
Construction
Hurricane conditions delay projects, damage worksites, and increase construction and recovery costs.
Public Entities
Storm damage disrupts critical infrastructure and increases emergency response and recovery costs.
Manufacturing Industry
Hurricanes disrupt production through facility damage, utility outages, and supply chain interruptions.
Our case studies are all over the world
Utilizing Machine Learning and real-time monitoring from satellite imagery & IoT, our state-of-the-art technology helps businesses bounce back faster against climate, cyber and other emerging risks.
Who it's for
- Real estate: cover across large commercial and geographically diversified property portfolios exposed to hurricane risk.
- Hospitality & tourism: protection against closure periods, canceled bookings, evacuation costs, relocation expenses, and reconstruction downtime.
- Construction: protection for projects and sites exposed during the build phase, including weather-driven delays and additional costs.
- Energy & renewables: cover for generation assets, transmission infrastructure, and renewable energy projects located in hurricane-prone regions.
- Public sector entities: rapid liquidity to support emergency response, recovery efforts, and rebuilding after major storm events.
Parametric coverage in 4 steps
Assess
Assess and evaluate the client's hurricane exposure using proprietary hurricane risk models.
Customize
Design a customized index cover with payout structures indexed according to wind speed and distance to storm track.
Monitor
Monitor insured locations throughout the hurricane season to determine whether a qualifying storm has occurred.
Payout
Receive a payout within days of reporting a loss, accelerating financial recovery and reconstruction.
Global Parametric Insurance Specialist
10 countries with offices around the world
20+ perils covered with best-in-class (re)insurers, written on A+ paper
150+ scientific experts: risk modelers, data scientists, and software engineers
$15B+ capacity already deployed through corporate brokers
FAQ
For more information on parametric insurance, triggers, claims processes, coverage structures: Descartes FAQ Hub
Who is the data provider?
For the Atlantic, Central North Pacific and Eastern North Pacific basins (United States, Mexico, Caribbean), Descartes relies on the National Hurricane Center (NHC), a division of NOAA. A private third-party data provider may also be used to model a high-resolution wind footprint.
How is a policy triggered?
A policy is triggered when the measured index—sustained wind speed at the insured location, or the storm's distance to the insured location combined with wind speed, depending on the structure—exceeds the predefined threshold agreed in the payout structure.
Why is the index based on sustained wind speed rather than gust speed?
One-minute sustained wind speed shows a stronger correlation with resulting damage than gust wind speed, and is determined by averaging observed values over a one-minute period.
What types of damage are covered?
A parametric policy covers any economic loss sustained from a triggering event, including but not limited to property damage, business interruption, and extra expenses. Direct physical damage is not required to trigger coverage.
How is the payout structure determined?
The payout structure is co-designed during the quoting process in collaboration with the broker and client.
How does the claims process work?
1) The client notifies their broker, Descartes and/or the risk carrier of the loss.
2) Descartes collects the final data from the certification agent to assess whether the event triggered the policy and at what payout threshold.
3) An event report is created stating the maximum monetary amount to be recovered.
4) The client issues a Declaration of Loss Statement.
5) The client receives the payout in line with the policy terms.
When does parametric insurance make the most sense?
Parametric coverage is especially valuable for property in high-exposure zones, for clients facing hard-to-place or hard-to-renew risks, and for those seeking fast, predictable liquidity after a catastrophe.
Contact Us
Whether you're quoting a complex risk, looking to break into new markets, or just curious about parametric insurance, our team is here to help you win. Reach out and we will get back to you within 48 hours.
