WTW reveals new parametric insurance policy

Willis Towers Watson (WTW) has launched a new parametric insurance policy after the insurance industry was told that there is “immense potential” for the cover.

Parametric insurance is where the trigger and claims payout are preset, meaning claims processing time is reduced.

Back in December 2023, Blink Parametric chief executive Sid Mouncey told Insurance Times that a firm ”without such an efficient tool in their arsenal will be at a distinct disadvantage”.

WTW said it will use its parametric policy to help protect the coral reef system in the South Pacific Ocean’s Lau Group of islands.

The Lau Group, located on the eastern side of the Fiji archipelago, is a cluster of 60 islands and islets covering over 114,000 square kilometres of ocean.

WTW said the product will address an insurance gap in the area as policies already in the market generally only cover fixed assets, such as property, which are paid out only after physical damage occurs.

The broker’s new policy will enable payouts to be “deployed at the most critical time” and aims to protect the livelihoods of those that depend on the reef ecosystem as a source of food and income.

WTW director and ecosystem resilience lead Sarah Conway said: “Building on lessons learned from our involvement with similar initiatives in other countries, this programme provides an exciting opportunity to innovate beyond rapid reef response to also include community assistance, enhancing the resilience of the ecosystem and those who depend on it.”

Support

The launch of the policy was supported by mining company BHP – WTW also liaised with charitable organisation Vatuvara Foundation (VVF) for its creation.

VVF states on its website that it is “committed to protecting Fiji’s ocean, empower local communities and inspire young ocean advocates”.

 “We are thankful that the innovative parametric policy will allow for the prompt access to funds following a destructive cyclone event to identify reef damage and assist reef recovery with a community-led team in Northern Lau,” VVF director Katy Miller said.

“Increased frequency and severity of extreme weather events is expected in the area and protecting natural ecosystems in the Lau Group is crucial to build long-term community resilience to anthropogenic threats, including climate change.”

The new cover came after WTW partnered with environmental organisation The Nature Conservancy (TNC) to launch a parametric coral reef insurance policy to cover hurricane damage in Hawai in November 2022.