Authors: Antoine Bavandi Gian Semadeni
Evolving from a niche solution to a mainstream tool, parametric reinsurance offers swift payouts based on predefined events rather than assessed losses. In this whitepaper, we will explore the evolution and growing appeal of parametric reinsurance as a volatility protection instrument for property insurers.
Parametric solutions have been valuable for addressing increasingly volatile frequency losses, such as severe convective storms, and can complement traditional reinsurance by providing faster settlements and flexible coverage. Innovations, including second-generation triggers and modeled-loss structures, have enhanced their effectiveness, aligning recoveries more closely with actual losses while maintaining simplicity.
The market has also seen an increase in risk capacity from dedicated parametric underwriters and capital providers, attracted by the transparency and efficiency of these structures. As traditional reinsurance pricing softens, parametric solutions remain a competitive option, offering cedants a practical addition to their volatility protection toolkit. Gallagher Re continues to lead in designing and placing tailored parametric products, helping insurers manage frequency losses, protect earnings, and secure liquidity after catastrophic events. Whether for public or private sector needs, parametric reinsurance is now a valuable complement to any reinsurance program.
