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Article 5 Min Read
As climate change intensifies the frequency and severity of extreme weather events, public entities and businesses need more flexible funding solutions. Parametric stands out as an adaptable resource capable of swiftly responding to potential disasters.
Many risk buyers remain challenged to find adequate coverage to address a growing protection gap, especially for their cat-prone exposures and other risks. Parametric is an alternative solution that has grown in utilization to insure against a variety of perils in any market conditions.
Risk managers are rethinking their risk resilience by turning to parametric insurance, an “if-then” model designed to complement and supplement a traditional indemnity program and better match capital to the broad nature of risk caused by natural disasters.
Parametric solutions have the flexibility to make hard-to-predict and often uninsurable “grey swan” events insurable. Such is the case for earthquakes — a potentially catastrophic risk across the globe.
As data becomes more advanced and precise, so does parametric insurance as a risk solution — a win-win for both risk managers and insurers.