Parametric Policies: From Product Design to Actuarial Pricing

Parametric insurance is emerging as one of the most innovative developments in the insurance industry, driven by climate change, new technologies, and the increasing availability of data. Unlike traditional indemnity-based solutions, parametric policies provide automatic payouts triggered by predefined parameters, enabling faster recovery and new forms of risk protection. This presentation explores the full lifecycle of a parametric insurance product, from product design and trigger definition to actuarial pricing and basis risk management. Particular attention will be given to the relationship between event and loss, the role of data and technology (satellites, IoT, AI), and the challenges actuaries face in developing robust and sustainable parametric solutions. The presentation also discusses how parametric insurance can support climate resilience by addressing acute and chronic physical risks, while highlighting the evolving role of the actuary in a data-driven and increasingly technological insurance market.