Moody RMS has announced a partnership with reinsurance brokerage Augment Risk to expand the parametric risk transfer market. The collaboration aims to serve a range of clients, including large corporations with captives, Lloyd’s syndicates and insurance-linked securities funds, promoting the benefits of parametric solutions. Parametric insurance is recognised as an alternative for catastrophe protection amid the challenges posed by natural disasters. The partnership will focus on a cross-section of perils, including windstorms, earthquakes, wildfires and severe convective storms. Ben Brookes, managing director at Moody RMS, comments: “Parametric risk transfer offers the combined benefits of high transparency and complete risk disclosure, plus the prospect of rapid loss settlement. “We look forward to continuing to open up significant market growth by increasing the use of sophisticated risk models and basis risk analytics as enablers.” Kurt Cripps, global head of parametric at Augment Risk, states: “For index-based solutions to grow as an asset class, the modelling must underpin the view of risk from an empirical and stochastic standpoint. “Furthermore, demonstrating how the product responds to certain perils is key to achieving solvency benefits for carriers.” The partnership will help deliver structured and consistent risk transfer submissions to the market, by enabling placements to be syndicated among various capital sources. The use of detailed modelling, including industry loss and stochastic analysis, is expected to foster trust in parametric policies as an alternative to traditional insurance products.
