Parametric Heat Insurance
Pre-agreed payouts when heat exceeds an agreed trigger, for businesses whose losses depend on the temperature.
How it works
Parametric insurance: the trigger and the payout are agreed before cover starts.
- Step 01
Event measured
An independent data provider reports the daily maximum temperature (T-max) at the agreed location throughout the cover period.
- Step 02
Agreed threshold met
The number of heat days, or the accumulated heat degrees, exceeds the trigger agreed before cover starts.
- Step 03
Pre-agreed payout
A fixed amount is paid for each additional heat day or heat degree, up to the cover limit.
Heat Day Cover
Payout for excess heat days
A heat day is defined as a day in which the daily maximum temperature (T-max) is above the defined threshold temperature.
If the trigger number of heat days is exceeded, the policy holder will receive a fixed amount for each additional heat day up to the cover limit.
Agriculture, construction, events and other industries where losses per critical day are constant.
Example
- Cover period
- July – August
- Threshold temperature
- 100°F (based on industry dynamics and client needs)
- Heat day
- T-max > threshold temperature
- Trigger
- 2 heat days (based on local climate and client needs)
- Payout per heat day
- USD 10,000
- Cover limit
- USD 100,000
During the cover period, the independent data provider reports 8 days in which T-max is above the defined threshold of 100°F.
Hover over a day to see it on the chart
| Day | 25 Jul | 26 Jul | 27 Jul | 3 Aug | 4 Aug | 5 Aug | 6 Aug | 7 Aug |
|---|---|---|---|---|---|---|---|---|
| T-max (°F) | 101 | 105 | 103 | 102 | 105 | 107 | 106 | 104 |
| Heat day (HD) | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 |
| Cumulative HD | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
Payout(8 cumulative heat days – 2 trigger heat days) × USD 10,000 per heat day = USD 60,000
Heat Degree Cover
Payout for excess heat degrees
Daily heat degrees are calculated as the difference between the threshold temperature and the daily maximum temperature (T-max), where T-max is above the threshold temperature.
If the trigger number of heat degrees is exceeded, the policy holder will receive a fixed amount for each additional heat degree up to the cover limit.
Agriculture, construction, services, and other industries where the intensity of a heat event generates losses which increase as temperature deviates from the threshold.
Example
- Cover period
- July – October
- Threshold temperature
- 100°F (based on industry dynamics and client needs)
- Heat degrees
- T-max – threshold temperature, when T-max is above the threshold; otherwise 0
- Trigger
- 15 heat degrees (based on local climate and client needs)
- Payout per heat degree
- USD 10,000
- Cover limit
- USD 1,000,000
During the cover period, the independent data provider reports 8 days in which T-max is above the defined threshold temperature of 100°F.
Hover over a day to see it on the chart
| Day | 25 Jul | 26 Jul | 27 Jul | 3 Aug | 4 Aug | 5 Aug | 6 Aug | 7 Aug |
|---|---|---|---|---|---|---|---|---|
| T-max (°F) | 101 | 105 | 103 | 102 | 105 | 107 | 106 | 104 |
| Heat degrees (HD) | 1 | 5 | 3 | 2 | 5 | 7 | 6 | 4 |
| Cumulative HD | 1 | 6 | 9 | 11 | 16 | 23 | 29 | 33 |
Payout(33 cumulative heat degrees – 15 trigger heat degrees) × USD 10,000 per heat degree = USD 180,000
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