Parametric Solutions: A Smarter Way to Weather the Storm This Hurricane Season

The Atlantic hurricane season officially begins on June 1, and recent years have reinforced the increasing impacts of these storms. In 2023, natural catastrophes resulted in economic losses of USD 280 billion, with insured losses reaching USD 108 billion. This marked the fourth consecutive year where insured losses surpassed the USD 100-billion threshold.

The trend continued in 2024, with insured losses from natural catastrophes projected to exceed USD 135 billion.  Notably, Hurricanes Helene and Milton severely impacted the US, resulting in estimated insured losses approaching USD 50 billion.
With rising sea surface temperatures fueling more frequent and severe storms and sea levels rising, the question is no longer if the next big one will hit - it’s when.

While the staggering property damage makes headlines, the hidden costs of these catastrophes are just as devastating. Beyond structural losses, businesses face weeks or even months of operational disruption, supply chain failures, and lost revenue. Unfortunately, traditional indemnity-based insurance often falls short in covering these broader financial impacts.

But there’s a better way: parametric insurance solutions.

Unlike traditional indemnity-based policies, which rely on damage assessments, parametric insurance offers pre-agreed payouts based on specific, measurable triggers - like wind speed or storm surge height. When the trigger threshold is met, the payout is processed, often within days.

No lengthy claims processes.
No disputes.
Just fast, reliable financial relief.

At Swiss Re Corporate Solutions, our Alternative Risk Transfer Solutions team is focused on solving problems. That’s why we’ve designed these parametric covers with simple triggers and payout mechanisms to speed up the claims process.

Parametric insurance offers more than just speed - it offers flexibility. Unlike traditional policies, parametric payouts are not tied to specific damage assessments, giving policyholders more freedom in how they use the proceeds.

That means the funds can be deployed for:

• Direct losses, such as property damage or deductible funding.
• Indirect financial losses, including business interruption, food spoilage, or overtime salaries for first responders.
• Resiliency efforts, like further hardening or fortifying damaged or destroyed infrastructure.

This flexibility is increasingly valuable in a globally connected world, where operational disruptions can trigger cascading financial impacts.

While hurricane activity forecasts are still emerging for the upcoming 2025 hurricane season, recent patterns make one thing clear: storms are becoming more severe, their financial impacts are growing, and it only takes one storm to make a season memorable.

Swiss Re Corporate Solutions’ claims experience in the parametric space demonstrates the value of these solutions. Since 2020, we have paid all parametric insurance claims within 30 days. This rapid liquidity enables businesses, governments, and public entities to kickstart recovery efforts immediately, rather than waiting months for traditional insurance settlements.

Parametric solutions are no longer just for large corporations. Today, they are being used by municipalities, real estate groups, and even small- to mid-sized businesses to protect against hurricane-induced losses. These policies can cover everything from business interruption costs to evacuation expenses - critical factors often excluded from traditional policies.

As hurricanes grow stronger and their financial toll rises, it’s time for the insurance industry - and its clients - to rethink their resilience strategies. Parametric solutions are not a replacement for traditional coverage but a complementary tool offering speed, simplicity, and certainty when it matters most.

This hurricane season, don’t let the next storm leave you waiting. With our wide variety of parametric insurance solutions, you’ll have the financial stability to weather the storm - and come out stronger.