Parametric Insurance: Using Objective Measures to Address the Impacts of Natural Disasters and Climate Change
Environmental Claims Journal, Vol. 23, Nos. 3-4, 2011
14 Pages Posted: 14 Sep 2014 Last revised: 30 Sep 2014
Date Written: May 1, 2011
Parametric insurance is a promising alternative to traditional insurance when it comes to addressing catastrophic weather events and their impact on developing nations. Where available, traditional insurance is expensive and can involve protracted claim adjustment. Parametric insurance, on the other hand, provides coverage monies automatically upon the existence of certain objective weather-related parameters based upon a set formula. This model has been shown to work in the Caribbean Basin, but requires international cooperation in pooling, measuring, and managing risk. The immediate availability of emergency-response funds can be crucial in mitigating the impacts of climate change and related extreme weather events.
Keywords: climate change, insurance
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