Addressing Tornado Risk in North America
Tornadoes, a sub-peril of severe convective storms (SCS), cause significant property damage in the U.S., where economic losses from SCS topped $65 billion in 2025, with insured losses reaching $50 billion—the third consecutive year above these thresholds. SCS also generated $61 billion in global insured losses in 2025, the third-highest on record, and remained the costliest peril of the year.
U.S. urban land area grew by 14% between 2000 and 2020, concentrating more exposed assets in tornado-prone regions, while rising construction and material costs continue to inflate claim severity. Our parametric tornado insurance, powered by satellite and climate modeling technology, provides fast payouts and up to $100 million in coverage capacity, ensuring crucial financial support in the aftermath of a tornado.
Parametric tornado insurance provides an alternative layer of protection, with customized coverage and predefined payouts based on objective parameters. It can provide additional capacity and rapid liquidity while complementing existing traditional insurance programs.
How our parametric tornado cover works
Descartes offers two parametric tornado products, structured around different triggers depending on the asset type.
The EF Scale product uses near-real-time tornado data and the Enhanced Fujita (EF) Scale to determine whether a qualifying event has occurred at an insured location. Coverage is structured around tornado intensity and the percentage of the insured area impacted by each EF-rated band along the tornado footprint, with predefined payout levels agreed upfront. The Satellite-Based Tornado product, designed for utility-scale solar farms, uses very high-resolution satellite imagery to detect the actual percentage of damaged panel surface—aligning payouts directly with the detected damage on site.
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. |
Covered Industries
Energy & Renewables
Tornadoes damage solar panels and renewable energy assets, disrupting generation and operations.
Retail & Consumer Goods
Tornadoes damage stores, disrupt operations, and cause business interruption and revenue losses.
Financial institution
Tornadoes disrupt branch operations, damage facilities, and cause business interruption and financial losses.
Hospitality
Tornadoes damage properties, disrupt guest operations, and cause closures and business interruption.
Construction
Tornadoes damage worksites, disrupt projects, and increase repair and recovery costs.
Public Entities
Tornadoes damage community assets and disrupt essential public services and operations.
Manufacturing Industry
Tornadoes damage operational assets, disrupt production, and cause costly business 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.
Where a parametric tornado 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 the amount of tornado-related losses retained by the insured when traditional deductibles create a significant liquidity gap.
- Top up a sublimit: add capacity where existing tornado limits are insufficient for the value of the insured assets.
- Cover non-damage business interruption: provide funds for lost revenue, downtime, SLA obligations, and other financial impacts that can arise following a tornado.
- Secure immediate liquidity: access funds within days of event confirmation to support repairs, operational continuity, and recovery.
- Wrap an exclusion: provide an additional layer of protection where traditional insurance does not adequately cover tornado exposure.
Who it's for
- Renewable energy: protection for utility-scale solar farms and other renewable energy assets exposed to tornado damage.
- Data infrastructure: rapid liquidity to support uptime, infrastructure repairs, SLA obligations, and unexpected costs following a tornado.
- Manufacturing: protection for high-value operational assets and business continuity following tornado events.
- Healthcare: protection for critical facilities and the financial impact of tornado-related disruption.
- Public entities: rapid financial support for community assets, cultural landmarks, visitor centers, and essential services following tornado events.
Parametric coverage in 4 steps
Assess
Assess and evaluate the client's tornado exposure using Descartes' proprietary risk model.
Customize
Design a customized cover with payout structures indexed according to tornado intensity, track footprint, or percentage of impacted area.
Monitor
Monitor the insured location for tornadoes throughout the policy period to determine whether a qualifying storm has occurred.
Payout
Receive a payout within days of reporting a loss, accelerating financial recovery and return to normal operations.
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
EF Scale product: How is the coverage area determined?
The coverage area is defined by taking the insured location(s) and adding a polygon encompassing the assets the client wants to insure. The exact shape is determined by underwriting during the quoting process, in collaboration with the broker and client.
EF Scale product: How is a tornado policy triggered?
A policy is triggered when a tornado footprint passes within the coverage area with a damage intensity that meets the predefined threshold agreed in the payout structure.
EF Scale product: How is the payout determined?
Descartes overlays the tornado footprint provided by the National Weather Service with the coverage area to determine the portion of the area affected and the intensity rating at which it was impacted.
EF Scale product: How is the intensity of a tornado measured?
The National Weather Service (NWS), a division of NOAA, uses the Enhanced Fujita (EF) Scale to assign intensity ratings along a tornado's path of destruction, and is the only federal agency with authority to assign official EF Scale ratings.
Satellite-Based product: How is the coverage area determined?
The coverage area is delineated by the precise layout of the insured location(s), as outlined in the solar plant's location information provided by the client or broker.
Satellite-Based product: How is a tornado policy triggered?
Two conditions must be met: a tornado track of at least EF0 passes through the insured location(s), as reported by NOAA, and damage to the solar panel surface is confirmed by satellite imagery.
Satellite-Based product: How is the damage percentage confirmed?
Descartes uses very high-resolution satellite imagery to assess the percentage of surface damage within the coverage area. An independent third-party agent certifies the imagery and superimposes it onto a map of the insured location(s) to determine payout eligibility.
Satellite-Based product: Why use satellite imagery instead of the EF Scale for solar farms?
The EF Scale wasn't designed for this asset type. The satellite-based approach more closely captures actual panel damage, resulting in payouts more precisely matched to loss.
Satellite-Based product: Can this be combined with other covers?
Yes. it's commonly paired with Descartes' radar-based parametric hail product, giving solar project owners full financial protection against both tornado and hail risk.
What types of damages 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. There is no requirement for direct physical damage to trigger coverage.
How does the claims process work?
- The client notifies their broker, Descartes and/or the risk carrier of the loss.
- Descartes collects the final data from the certification agent to assess whether the event triggered the policy and at what payout threshold.
- An event report is created stating the maximum monetary amount to be recovered.
- The client issues a Declaration of Loss Statement.
- The client receives the payout in line with the policy terms.
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.
