What is Parametric Insurance and why is TonkaBI involved?
Most people understand traditional insurance. A premium is paid against a policy (a set of rules that determine the terms of a claim payment) and when an event (car accident, damage to property, illness , etc) happens you can make a claim. There then follows a lot of work to determine the levels of payments and validity of the claim
Parametric insurance is different. It based on parameters, or so-called parametric triggers. When these are matched the insurance is fulfilled. These triggers are directly linked to the parameters of a risk event. For example, a policy can imply that a certain amount of rain or wind or sun; too much or too little, must occur for the policy buyer to be entitled to compensation.
Parametric insurance or index insurance is growing in awareness across many industries and locations, however adoption of such insurance can be challenging.
Insurance companies can be reluctant to offer index or parametric insurance owing to the perception it’s difficult to assess and overall, complicated to evaluate. Many insurers lack the needed knowledge and technical understanding to develop a sustainable and profitable parametric insurance solutions.
This is a pity, since today many more things can go wrong owing to population growth, urbanisation, climate change, technological growth and an overall growth in economic activity around the world. This is environment an ideal for insurance and tech to team up and to build end to end solutions that are sustainable.
Parametric insurance is being talked about more and more across the global insurance and reinsurance industry. It is a great opportunity to match tech with insurance and to reap benefits over traditional process. The typical parametric policy can be fully automated, reducing the costs of providing traditional cover by over 30%.
Data is the key and new data sets are being used together with technology such as Internet of Things (IoT) and other sensors and devices. Gaining a strong correlation between the insurable risk and the data is essential to providing meaningful and useful cover.
Clarity and communication are important to its success, ensuring that the customer understand the product and can see and join in with the use of their policy. Data analytics and visualisations aimed at the insured can be developed and deployed to aid the communication of the policiy providing a transparent process to the user, showing in real time how the policy is performing against the event(s) under the policy.
Perhaps this will see customer satisfaction levels move off rock bottom!
At TonkaBI we are well acquainted with the Insurance industry and can offer end to end solutions for insurers especially around parametric insurance policies. TonkaBI is uniquely positioned to deliver and support Parametric insurance products for insurers and brokers globally.
clients and tags #parametrics microinsurance and shared economy insurance #captive
tags #insurance #claims #artificalintelligence #AI #machinelearning