Parametric insurance pays out automatically upon verification of objective data triggers (e.g. Category 4 hurricane landfall), providing instant liquidity.
1. Parametric Architecture Workflow
- Objective Index Triggers: NOAA wind speed measurements, USGS earthquake Richter magnitudes, or satellite rainfall indices.
- Zero Claims Adjustment Delay: Payouts transferred directly to the policyholder's bank account within 48 hours of trigger breach.
- Basis Risk Management: Calibrating trigger stations close to the insured assets to minimize variance between actual physical loss and index payout.