Aon and Swiss Re CorSo launch parametric US storm surge cover with Floodbase

By Henry Gale

Feb 3 - (The Insurer) - Aon, parametric specialist Floodbase and Swiss Re Corporate Solutions have announced a new parametric insurance product designed to cover hurricane-related storm surge risks for US corporations.

The policy pays claims when storm surges exceed an agreed water height, measured using a variety of meteorological data sources. Payouts can be used to cover any financial loss associated with the event, not only physical damage.

Storm surge damage can account for more than a third of losses from some hurricanes, Aon said, while traditional insurance policies can have high deductibles or exclusions for storm surge risks.

Cole Mayer, head of parametric solutions at Aon, said: “Our data shows that storm surges can be a significant driver of losses for insurers, so we developed this collaborative parametric solution to help bolster existing levels of cover.

"The solution can function either as a standalone product or in conjunction with traditional and non-traditional insurance policies, to ensure that clients can secure comprehensive protection for their US storm surge exposures. It is part of a suite of Aon product offerings that together are helping to shape better decisions and more comprehensive sources of liquidity for clients.”

Martin Hotz, head parametric natural catastrophe at Swiss Re Corporate Solutions, said: “Parametric insurance provides a fast, flexible and transparent way to cover financial losses caused by natural catastrophes.

"A substantial part of hurricane-related losses can be the result of storm surge, and with this innovative solution we can better assist corporations in exposed areas with a rapidly-paying cover that fits their individual risk management strategies."

Annbjørg Medhaug, chief product and strategy officer at Floodbase, added: “The economic losses in the wake of major hurricanes are staggering. The inherent flexibility of this parametric storm surge product provides US coastal corporations with a much-needed solution to address their specific protection gaps.

"Floodbase is delighted to have collaborated with Aon and Swiss Re Corporate Solutions to develop this solution, which demonstrates our continuous commitment to uniting technology and risk capital in order to bring more comprehensive protection to cedants.”