Your business income may depend on weather conditions e.g. sunshine or rainfall. Or perhaps your government needs to plan for the economic impact of droughts, floods or earthquake. Weather risk insurance can help.

This relatively new class of insurance is written by a small number of specialist underwriters, so any proposal is better to be presented by a specialist broker such as Alesco RMS. We’ll take your requirement to the market, present your proposal (which might suggest a mix of traditional and parametric insurance), and obtain quotes on your behalf. We will then advise you as to whether the cover and cost are likely to be suitable for your needs.

Traditional weather & natural catastrophe insurance

Alesco RMS can arrange weather-risk and natural-catastrophe insurance from the traditional insurance market, which will cover you for losses resulting from adverse weather or events such as a volcanic eruption, earthquake, flood or windstorm (such as a tornado or hurricane). This could cover you for business interruption, property damage, loss of stock, and more. Do bear in mind that this type of cover requires evidence of your losses when making a claim, which can introduce significant delays – this is not a requirement with parametric insurance.

Parametric insurance

Parametric cover may be of interest because claiming only requires proof of the weather event or natural catastrophe with no specific loss adjustment based upon actual insured losses. That’s because it’s all about metrics: your policy will specify exactly how much of a certain type of weather, or what kind of natural catastrophe, will trigger a claim. You aren’t required to provide any evidence of loss, only that the conditions or event occurred. This is not difficult to do, since these events are closely monitored and recorded. This means that the claims process can be straightforward and settlements fast.

The benefits of parametric insurance include:

  • It might otherwise be slow and difficult for you to prove your loss
  • Efficient cash settlement
  • You are relieved of administrative burden when it comes to making a claim
  • How you spend your settlement is entirely up to you. It might cover any loss of income, making financing payments or repayments in the absence of that income, the repair of any damage, paying a contract penalty, hiring extra staff, or anything else.

Parametric weather cover

Example applications for parametric weather or Natural Catastrophe insurance:

  • The amount of rain falling on a major construction site, which might cause delays
  • Major Natural Catastrophe events (e.g. Windstorms; Earthquakes; Floods and Volcanic Eruptions)
  • The amount of rain falling around a hydroelectric plant, or sun falling on a solar-panel array
  • Summer-oriented companies, such as ice-cream manufacturers, might need insurance against too little or too much sun (reduced sales)
  • Hotels may wish to protect themselves against reduced business as a result of adverse weather conditions (or even access to the site for a theme park)
  • A government may wish to use this type of insurance to help cover the economic impact of a drought or flood, which might cover the costs of rescue activity, business support, public health campaigns, or the unanticipated costs to import food.
  • Volcanic eruptions.

Please get in touch

If you’re interested in traditional weather-risk insurance or Natural Catastrophe coverage on a traditional or parametric basis please contact us. Our key contacts are listed below.

View our glossary of insurance terms

Weather Risk and Natural Catastrophe Insurance Solutions Key Contacts