Insight
Parametric insurance: A captivating solution
Parametric policies, which pay based on the magnitude of an event, can bridge coverage gaps that are difficult to insure with a traditional indemnity policy.
This report, titled “Dear Actuary,” is organized as a response to a question posed by a hypothetical plan sponsor who asks why their town uses a lower interest-rate assumption compared with that of a municipality nearby. The explanation covers the factors affecting the interest rate assumption, and discusses the following:
Insight
Parametric policies, which pay based on the magnitude of an event, can bridge coverage gaps that are difficult to insure with a traditional indemnity policy.