Many risks, ranging from supply-chain interruptions due to agricultural commodity production shortfalls to loss of access due to geopolitical action to cyber liabilities, are very difficult for captives to manage, since losses are intangible and therefore hard for conventional risk transfer markets to measure and assume. Parametric (or index-based) reinsurances provide a solution by insuring events, rather than losses. The proposed session explains the breadth of loss events which can be insured using parametric structures, how indexes are constructed to maximize the match between loss and payment, and provides real-world examples of the use of parametric insurance by captives.

Following this session, attendees will be able to reduce uninsured exposures through parametric risk transfer, understand how parametric structures are already used by captives to transfer difficult risks, and understand how parametric insurance could complement their existing reinsurance protections.