What are parametric insurance triggers?

Parametric insurance triggers are predetermined conditions (like wind speed, rainfall amounts, or earthquake magnitude) that automatically activate insurance payouts. Unlike traditional insurance that requires damage assessment before paying claims, parametric insurance pays out quickly based on measurable data, making it ideal for extreme weather events.

How do climate risks affect insurance companies?

Climate risks create both challenges and opportunities for insurers. Traditional insurers may face higher claims from more frequent disasters, potentially leading to losses or premium increases. However, innovative insurers in this collection use advanced technology to better predict, price, and manage these risks, potentially creating competitive advantages and new market opportunities.

What is reinsurance and why is it important for climate risks?

Reinsurance is essentially insurance for insurance companies. Reinsurers (like RNR in this collection) take on portions of risk from primary insurers, helping them manage exposure to major catastrophes. As climate disasters grow more severe, reinsurers play a crucial role in absorbing large-scale losses and stabilizing the insurance market.

How do satellite and data analytics companies support climate insurance?

Companies like PL and SPIR provide earth observation data and analytics that help insurers assess and price climate risks more accurately. Their satellite imagery can monitor environmental conditions in real-time, detect changes, and provide crucial data for both risk assessment before policies are written and claims validation after disasters occur.

What is a non-cyclical demand driver?

A non-cyclical demand driver is a factor that creates steady demand regardless of economic conditions. In this case, extreme weather events occur independently of economic cycles, meaning demand for specialized insurance continues during both economic booms and recessions, potentially making these stocks more stable during market downturns.

15 handpicked stocks

Extreme-Weather Insurance Innovators

This collection features forward-thinking companies using cutting-edge technology to insure against catastrophic weather events. As climate-related disasters become more frequent, these specialized insurers and data providers are positioned to become essential components of the global risk management landscape.

Han Tan | Market Analyst

Updated 2 days ago | Published at juin 17