As the insurance industry continues to evolve, brokers are tasked with staying up-to-date on the latest products and solutions available to their clients. One such product gaining traction is parametric insurance, which provides coverage based on predetermined triggers, such as weather events or seismic activity.
However, navigating the complexities of parametric insurance can be challenging for brokers. To help, we’ve compiled some tips to keep in mind when working with clients interested in this type of coverage.
- Understand the client’s specific needs and risks: While parametric insurance can offer quick payouts and customized coverage, it’s important to first understand the client’s specific risks and needs before recommending this type of coverage.
- Familiarise yourself with available products: As with any insurance product, it’s important to familiarise yourself with the available parametric insurance products on the market. This includes understanding the triggers and payouts of each product and how they may apply to your client’s specific needs.
- Assess the reliability of the triggers: Because parametric insurance relies on predetermined triggers, it’s important to assess the reliability of those triggers. Consider historical data and expert opinions to ensure that the triggers are accurate and effective.
- Work with experienced underwriters: Parametric insurance can be complex, so it’s important to work with underwriters who have experience in this type of coverage. They can help you navigate the intricacies of the product and ensure that your client is getting the coverage they need.
- Educate your clients on the benefits and limitations: While parametric insurance can offer benefits such as quick payouts and tailored coverage, it also has limitations. Make sure your clients understand the benefits and limitations of this type of coverage before making a decision.
By keeping these tips in mind, brokers can effectively navigate the complexities of parametric insurance and provide their clients with the coverage they need.