Dynamic changes are making risk unpredictable, difficult to model, and assess, in turn creating gaps in coverage. Parametric insurance has emerged as an effective vehicle to offer certainty and mitigate the protection gap. Capital providers too prefer parametric insurance as they are not required to understand the complexities of the inherent risk vis-à-vis the assets, they invest in. Consequently, insurers are revisiting the existing parametric products to make them more comprehensive and provide innovative coverage.
Some of the changing facets of parametric insurance include: