Earthquake Parametric Insurance

Parametric insurance is known as an index-based insurance policy and coverage is based on a metric from the collection of reliable data from third-party source. The claims payment amount is agreed to in advance and is triggered when the threshold is exceeded even without any damages.

Earling's short-term earthquake risk models have demonstrated the ability to detect the risk of major earthquakes, such as the M6.4 in December 2022 and the M6.2 in December 2021, before these events occurred and informed more than 50 specialists and authorities on time. From the perspective of earthquake risk transfer through parametric earthquake insurance, Earling's services offer significant benefits for individuals, the enterprise sector, and (re)insurance companies.

Access to Earling's short-term earthquake risk models can significantly benefit risk owners in transferring their earthquake risks through parametric insurance. For instance, consider the scenario where Earling's technology detected an elevated risk of an earthquake with a magnitude larger than 6 in a specific region. With this early warning, a business operating in the area could proactively seek parametric insurance coverage to protect against potential losses resulting from the forecasted earthquake.

Earling, the a leading provider of short-term natural disaster risk systems, has the potential to impact both risk takers, such as insurance companies, and risk owners, including enterprises and small to medium-sized enterprises (SMEs), in the context of parametric insurance.

Impact on Risk Takers (Insurance Companies)

1. Data-Driven Underwriting: Earling's technology can provide insurers with accurate and timely seismic data, enabling them to underwrite parametric insurance policies more effectively[2][3].

In recent years, the insurance industry has witnessed a paradigm shift with the introduction of innovative products designed to offer more efficient and tailored coverage to individuals and businesses. One such innovation is parametric insurance, a concept that is gaining traction due to its unique approach to risk management. In this blog post, we'll delve into the definition of parametric insurance, its key features, advantages, and potential applications.