“Unlike traditional property coverage, parametric insurance is a type of insurance that does not indemnify the pure loss, but rather issues a set payment upon the occurrence of an objective triggering event, such as an earthquake of a certain magnitude or a hurricane of a specific intensity. Sometimes referred to as index-based insurance, this type of coverage has been around for more than 20 years, but it may now be reaching a new level of popularity as organizations look for additional alternative risk transfer options.”Risk Management
April 29, 2019
With parametric insurances, “payouts will be faster, with no gray areas, costly court disputes or lengthy waiting period.”
Parametric reputation insurance: indemnification affirming trust and reducing economic losses.
Reputations are valuable strategic intangible assets. Threats to these assets⏤ enterprise reputation risks, often mislabeled “brand risks” ⏤ need to be managed, and management needs to be overseen through reputation risk governance lest reputational damage or reputational harm result in long-tailed go-forward losses in economic value and/or political power. Because these intangible risks arise from the interplay of stakeholder expectation, experiences, and media amplification, parametric insurances for intangible asset risks, for reputational value, for reputational harm, and for reputation assurance help mitigate risk by telling a simple, convincing and completely credible story of quality reputation governance to stakeholders. This story telling effect is the expressive power of insurance complementing insurance’s better known instrumental power of indemnification.
Risk management, risk financing in insurance captives, and risk transfer through reputation insurances comprise the constituent elements of a comprehensive solution.
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