Post by GreenAnt

Here is what the global protection gap looked like in 2024. 💸 Global economic losses from natural catastrophes reached an estimated $368 billion. Only $145 billion was covered by insurance. That means roughly 60 cents of every dollar lost to natural disaster last year was uninsured. Liberty Specialty Markets For traditional insurance, the reasons are well understood: Coverage is too expensive, too complex, too slow, or simply unavailable in the regions that need it most, especially as climate change worsens. Parametric insurance was designed to change that equation. Predefined triggers. Rapid payouts. No lengthy loss assessment process. The promise is coverage that reaches further and responds faster than conventional products can. 📋 The parametric insurance market has seen substantial growth, with annual gross premiums rising from $11.7 billion in 2021 to an estimated $16.2 billion in 2024, with projections reaching upwards of $50 billion by the mid-2030s. (https://lnkd.in/eBHyynd7) The growth is real. But the protection gap is growing alongside it. The reason for this concerns a problem that market size alone doesn't solve. The fundamental challenge of parametric insurance has always been basis risk: The gap between what the trigger measures and what the policyholder actually experiences. A parametric policy triggered by conditions at a regional weather station may not accurately reflect what happened at a specific property thirty miles away. (https://lnkd.in/gczUwaAx) Closing the protection gap requires parametric products with triggers grounded in the physical behavior of specific locations, not regional proxies that introduce the basis risk they were supposed to eliminate. 🌍 That is a problem Desidera is built to solve. 🔗 Read more on basis risk in parametric insurance: https://lnkd.in/gwdB-z-X #ParametricInsurance #BasisRisk #ClimateRisk #ProtectionGap #FloodRisk #InsurTech #AnticipatoryFinance #Desidera #GreenAnt