Parametric Insurance: A Complementary Approach to Risk and Coverage?
Insurance has traditionally followed a familiar model: a loss occurs, the policyholder demonstrates the extent of the damage, and the insurer evaluates and determines potential coverage based on established policy terms. While this framework functions effectively in many contexts, it sometimes presents challenges in scenarios involving indirect impacts, delayed effects, or losses that are not easily quantified. These situations can introduce uncertainty into the claims process and highlight areas where conventional coverage may not fully align with the nature of the risk.