Parametrics seeing “significant expansions,” particularly in flood risks: Minhas, Miller

Parametric risk transfer, insurance and reinsurance solutions are seeing “significant market expansions,” according to Rowan Minhas of independent broker Miller.

Broker Miller had commented on then state of the market around the start of 2024, with alternative solutions one area of focus and opportunity, it seems.

Rowan Minhas, who specialises in onshore energy risks and parametric insurance at Miller, explained one area of growth in parametric risk transfer offerings.

“There have been significant market expansions, particularly in the realm of flood parametric, now accessible to new states in the US,” Minhas explained.

Going on to say that, for parametric flood risks, “Depending on the market, the provision can range considerably, with some able to offer up to USD75m per risk.”

The parametric flood insurance market has been expanding steadily, as the robustness of data, the range of data and third-party monitoring services, and the offering of calculation agents, increase and improve.

There has been quite a focus on satellite monitoring data and remote sensing for flood parametrics, with transactions in the market for primary commercial and industrial risks, as well as much discussion on the potential of wide-parametrics for flood reinsurance risk transfer as well.

Insurers and reinsurers are also innovating with river gauge data and coastal sea level data, to provide parametric flood solutions for a growing range of cedents.

Minhas also noted increased demand for parametric risk transfer in general.

“There’s been a notable increase in appetite since last year, with a greater influx of enquiries across all varied weather perils,” he said.

” With the traditional market becoming either too costly or unattainable due to certain risks, insureds are growing more aware of parametric policies, prompting them to explore alternative options,” Minhas explained.

He went on to say that rates have been rising for certain risks though, adding, “Whilst we’re unable to provide specific rates, it’s possible that we may observe a minor rise depending on the location of the risk.”