In this article from Insurance Journal, Guy Carpenter’s Guillermo Franco, Global Head of Catastrophe Risk Research, explained how Guy Carpenter is developing a research project around the use of parametric solutions to address coverage gaps for wildfires in California and hurricanes in Florida.
“Insurance plays a critical role in recovery from natural disasters, but many households and small businesses do not have sufficient coverage to fund repair and rebuilding due to affordability of products, limited risk awareness, or behavioral biases in decision making,” Guillermo said. “Community-based catastrophe insurance programs like parametric reciprocal exchanges, may constitute an innovative way to help close this protection gap in the US and speed up payments to aid recovery, which will enhance the financial resilience of communities.”
This project complements Guy Carpenter’s efforts in supporting community-based catastrophe insurance, a concept developed in partnership with the Wharton Risk Management and Decision Processes Center and Marsh McLennan.