As a combined result of climate change and population and economic growth, tornado risks and losses are clearly increasing. Severe thunderstorms and the resulting hazards of damaging winds and tornadoes cause billions of dollars of damage and heavy losses each year. As tornado risk intensifies, outbreaks are both extremely dangerous and exceptionally challenging to specifically and effectively address with existing market solutions.
Descartes’ parametric tornado covers offer brokers, corporate, and public sector clients an alternative to maintain tornado insurance at an affordable rate, including in the most challenging regions.
We cover clients’ tornado risk exposure in all sectors from industry buildings and strategic supply chain assets to agriculture, offering full flexibility and swift payouts.
Using our proprietary data-driven approach and state-of-the art technology, we can better evaluate and analyze these exposures and damages in real time.
This type of cover can be used by any client in any industry class operating in a Tornado prone region.
Client Need: A Tornado Alley adjacent low-hazard construction materials manufacturer felt mistreated by a hardening property market and elected to seek coverage only for catastrophic weather events. Their broker approached Descartes Underwriting to discuss parametric tornado coverage.
Pain Point: Unable to diversify their geographic risk, the client’s entire manufacturing capacity was highly concentrated and exposed to convective storms and the tornadoes which sometimes form as a result. A direct tornado strike to any of the clustered facilities or their associated storage yards would lead to severe business disruption and economic hardship.
Our Solution: Descartes’ parametric tornado coverage provides a near immediate and highly flexible response to tornado outbreaks. We worked with the broker to design an index which responded to the client’s exact exposure as it scaled with tornado proximity and strength. The client was able to custom build a policy which would secure their cash flow if one or more of their facilities were to be hit by a tornado. Descartes is able to guarantee claims proceeds are delivered to the client within 10 days of receiving a statement of loss.