Aon plc has launched a parametric insurance solution to mitigate commercial losses from hurricane-related storm surges, developed in partnership with Floodbase and Swiss Re. This product addresses traditional policy gaps, offering rapid financial relief. Notably, Hurricane Helene caused significant economic loss in 2024, underscoring the importance of such solutions for corporations and public entities.
Aon plc has introduced a new parametric insurance solution aimed at addressing commercial losses incurred from hurricane-related storm surges along the United States coastline. This solution was developed in partnership with Floodbase, a parametric flood insurance provider, and Swiss Re Corporate Solutions. The collaborative effort seeks to fill protection gaps prevalent in traditional insurance policies that often entail high deductibles and substantial exclusions for storm surge risks.
According to Aon’s 2025 Climate and Catastrophe Insight report, Hurricane Helene was the most catastrophic natural event of 2024, leading to an estimated economic loss of around $75 billion, primarily due to flooding in the U.S. Insurers faced approximately $37.5 billion in claims related to hurricanes Helene and Milton, inclusive of payouts from the National Flood Insurance Program. Storm surge damage represents over one-third of the total loss cost during various hurricane events.
Cole Meyer, head of Aon’s parametric solutions, highlighted that data indicates storm surge can significantly impact losses for corporations, public entities, and (re)insurers. As such, the development of this parametric insurance solution aims to enhance coverage levels already in place. Parametric insurance functions independently or can complement other insurance policies by providing immediate coverage based on specific parameters.
Unlike conventional indemnity insurance, which is contingent on actual loss assessments, parametric insurance is anchored on measurable criteria such as water height. Policyholders can determine their required payout based on expected storm surge levels, with rates adjusted correspondingly. The funds can be allocated towards any financial setbacks resulting from the catastrophic event, utilizing various meteorological data to evaluate inundation risks.
“Parametric insurance provides a fast, flexible and transparent way to cover financial losses caused by natural catastrophes,” stated Martin Hotz, head of parametric natural catastrophe at Swiss Re Corporate Solutions. The introduction of this innovative solution aims to assist corporations in vulnerable areas by offering a rapid payout cover that aligns with their specific risk management strategies.
The increasing frequency of severe weather events, particularly hurricanes, has necessitated the development of insurance solutions that can effectively address the unique risks associated with these occurrences. Traditional insurance policies often lack comprehensive coverage for storm surges, prompting the emergence of parametric insurance products. Aon’s collaboration with Floodbase and Swiss Re Corporate Solutions marks a significant advancement in providing rapid financial relief to businesses affected by natural disasters, particularly in coastal regions.
The launch of Aon’s new parametric insurance solution represents a crucial development in mitigating financial losses associated with hurricane-related storm surges along the U.S. coastline. By addressing gaps in traditional insurances, this innovative offering promises quicker payouts and enhanced coverage for affected entities. As climate-related risks continue to escalate, such solutions will be vital in bolstering financial resilience against natural catastrophes.
Original Source: www.insurancejournal.com
