Parametric insurance catalyzer Skyline Partners Ltd and Munich Re announced a payout to the Jamaican Co-operative Credit Union League (JCCUL) following a claim triggered by Hurricane Beryl.
The payment was made under a parametric insurance policy first issued in April 2022 and renewed by Munich Re. The policy is designed to help farmers by allowing them to take a payment holiday when extreme weather events, such as hurricanes, impair their ability to repay micro-loans.
Hurricane Beryl passed close to Jamaica on July 3, but did not make landfall. As a result, many traditional event-triggered insurance policies, which rely on factors like wind speed, minimum pressure, or specific radius thresholds, did not activate.
However, Skyline Partners’ FatTrack trigger mechanism, which adjusts to the dynamic conditions of hurricanes, responded to the event. As a result, a payout was made under the Howden-brokered policy.
FatTrack-triggered policies pay out based on the number of insured location tiles impacted by the hurricane’s path and the storm’s category when it enters each tile. These paths are calculated using data from the National Hurricane Center (NOAA).
In the case of Hurricane Beryl, 45% of the JCCUL policy’s total value was paid out, reflecting the storm's close proximity to Jamaica, which still caused significant damage despite not making landfall.
Laurent Sabatié, co-founder of Skyline, remarked that the insurance product responded as intended. He noted that the partial payment for Beryl in Jamaica demonstrates the effectiveness of the FatTrack mechanism for underwriters, insured lenders, and beneficiaries.
While some in the industry are still waiting to determine if their coverage will be activated, the parametric insurance policy has already made its payment.
Skyline’s co-founder Gethin Jones said that the payment should help build confidence among lenders who require borrowers to secure insurance but may still be hesitant about parametric solutions.
He said that the policy’s tailored approach lowers basis risk compared to traditional policies and offers greater efficiency.
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