Index insurance: A shield against emerging risks

In a world facing rising climate disasters and cyberattacks, traditional insurance often fails to protect the most vulnerable due to high costs, long delays, and limited accessibility. In this video, Daniel Nkameni—Actuarial Consultant at Detralytics and PhD candidate at the Polytechnic Institute of Paris—presents index insurance as a smarter solution for emerging risks.    Index insurance pays out based on objective indicators like rainfall or temperature, allowing faster, lower-cost compensation. But it also introduces basis risk—a mismatch between the index and actual losses. To address this, Daniel introduces a hybrid insurance model that combines the speed of index insurance with the precision of traditional coverage. Using real agricultural data from Illinois, the model optimizes payouts while accounting for policyholder preferences and claim delays. This hybrid approach offers a practical, scalable path to insure against modern risks—like drought or cybercrime—more effectively.    Daniel calls on regulators, insurers, and researchers to collaborate in refining and scaling index-based solutions, ensuring fairer and faster protection in a rapidly changing world.