A.M.BestTV: Insurers Develop New Ways to Trigger Disaster Coverage

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FOR IMMEDIATE RELEASE

OLDWICK - JULY 27, 2015 12:24 PM (EDT)
This ^A.M.BestTV episode explores how brokers and insurers are borrowing from the catastrophe (cat) bonds world by developing coverage against natural perils that are triggered by measurable parameters rather than traditional claims reporting. Click on http://www.ambest.com/v.asp?v=parametric715 to view the video program.

Unlike traditional insurance, parametric instruments use a model to calculate the payout of the insurance policy. Swiss Reinsurance Company, which provides parametric products, has noted that this payout model aims to closely mirror the actual damage on the ground and enable a much more rapid payment as no loss adjusters are required after the event to assess the actual damage.

"Parametric instruments operate in the exact same way as a cat bond; however, the actual risk is borne by the insurance company," said James Crystal, executive vice president at Crystal & Company. "In this market, the insurance company will not ask you for any information about what it is insuring, since it is underwriting against the actual event occurring. It is underwriting the risk."

A.M. Best's Managing Senior Financial Analyst Asha Attoh-Okine added, 'The traditional market is evolving, and insurance companies are learning from what is happening in the alternative cat bond market."

Other people that appear in this episode include:

• Emma Garner, executive vice president at Swett & Crawford.

On Friday, July 31, 2015, ^A.M.BestTV will premiere a special presentation looking at the impact Hurricane Katrina left on the insurance industry 10 years after the deadly storm, with interviews with industry executives and regulators from New Orleans. See the preview at http://www.ambest.com/v.asp?v=katrinapreview715 .

Recent episodes of ^A.M.BestTV include:

• Insurer Mitigates Wildfire Damage With Tree Effort: The Philadelphia Insurance Companies is partnering with the Arbor Day Foundation to mitigate disaster prevention, namely wildfires, by planting 80,000 trees: http://www.ambest.com/v.asp?v=arbor715.


• For Marine Insurers, Bigger Ships Carry Bigger Risks: Marine insurers talk about the challenges they face as new vessels that can carry up to 20,000 containers impact pollution and increase the risks to cargos, hulls and cyber systems, as well as political risk, since the marine industry has a global presence: http://www.ambest.com/v.asp?v=marine715.


• Insurers Brace for 3-D Printing Revolution: Insurers are preparing for a host of coverage issues, including product liability, intellectual property claims and other concerns as 3-D printers become more advanced and available: http://www.ambest.com/v.asp?v=3d715.


• Digital, Social Media Remaking Insurance Marketing: Insurance marketers at the Insurance Marketing & Communications Association's annual conference in Nashville, TN, said the growing array of communication channels is presenting greater creative opportunities but new resource challenges: http://www.ambest.com/v.asp?v=imca715.

^A.M.BestTV covers exclusive A.M. Best information and reports, targeted topics and key developments in the (re)insurance industry every Monday, Wednesday and Friday. Sign up for alerts of episodes at http://www.ambest.com/multimedia/ambtvsignup.html. View ^A.M.BestTV episodes at http://www.ambest.tv .

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.