Parametric solutions
Despite vineyards’ practical efforts, risk mitigation has only come so far. This has led to clients searching for alternative methods of risk transfer, like Parametric Insurance.
Traditional insurance provides indemnity against the loss incurred from a weather-related event. This type of insurance can be expensive, however, and may not give the cover required. Insurers are often limited in their capacity and cover may not be flexible enough to reflect the different exposures that come with changing seasons.
By contrast, Parametric Insurance solutions cover the probability of a loss-causing event happening. Parametric solutions allow for more financial certainty and price reliability with features such as limited claims handling costs and whole season coverage. There is also the benefit of added transparency, as Parametric solutions ensure historical payouts are shared, while the recovery table and salvage rates are pre-defined.
What’s more, the flexibility of Parametric Insurance allows for bespoke and tailored solutions with key benefits such as speedy claims process and quick payouts.
What’s more, the flexibility of Parametric Insurance allows for bespoke and tailored solutions with key benefits such as speedy claims process and quick payouts. It uses objective and verifiable data points – such as temperature (in the case of frost), number of burnt hectares (for wildfires) and millimetres of rainfall or density of soil moisture (to measure drought). Payment of a claim is made once a pre-defined parameter has been triggered, allowing for quick claims settlements.
A wildfire Parametric, for instance, can be an option when the traditional All Risk market fails to offer economically viable solutions. Note that in the US states of California and Washington, these products cannot be combined with an All-Risk property program, owing to Standard Fire Following regulations. However, they can be attractive if wildfire is of chief concern and ultimately the biggest risk at hand.
