Parametric Temperature Insurance
Pre-agreed payouts when heat or frost 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 and minimum temperatures (T-max, T-min) at the agreed location throughout the cover period.
- Step 02
Agreed threshold met
The number of heat or frost days, or the accumulated heat or freeze degrees, exceeds the trigger agreed before cover starts.
- Step 03
Pre-agreed payout
A fixed amount is paid for each additional day or 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
Frost Day Cover
Payout for excess frost days
A frost day is defined as a day in which the daily minimum temperature (T-min) is below the defined threshold temperature.
If the trigger number of frost days is exceeded, the policy holder will receive a fixed amount for each additional frost day up to the cover limit.
Agriculture (late frost), construction (delay penalty), winter services, and other industries where losses per critical day are constant.
Example
- Cover period
- December – March
- Threshold temperature
- 32°F (based on industry dynamics and client needs)
- Frost day
- T-min < threshold temperature
- Trigger
- 5 frost days (based on local climate and client needs)
- Payout per frost day
- USD 10,000
- Cover limit
- USD 100,000
During the cover period, the independent data provider reports 8 days in which T-min is below the defined threshold of 32°F.
Hover over a day to see it on the chart
| Day | 31 Dec | 1 Jan | 2 Jan | 3 Feb | 4 Feb | 5 Feb | 6 Feb | 7 Feb |
|---|---|---|---|---|---|---|---|---|
| T-min (°F) | 30 | 28 | 31 | 27.5 | 25 | 22 | 30 | 28 |
| Frost day (FD) | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 |
| Cumulative FD | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
Payout(8 cumulative frost days – 5 trigger frost days) × USD 10,000 per frost day = USD 30,000
Freeze Degree Cover
Payout for excess freeze degrees
Daily freeze degrees are calculated as the difference between the threshold temperature and the daily minimum temperature (T-min), where T-min is below the threshold temperature.
If the trigger number of freeze degrees is exceeded, the policy holder will receive a fixed amount for each additional freeze degree up to the cover limit.
Agriculture, construction, winter services, and other industries where the intensity of a frost event generates losses which increase as temperature deviates from the threshold.
Example
- Cover period
- December – March
- Threshold temperature
- 32°F (based on industry dynamics and client needs)
- Freeze degrees
- Threshold temperature – T-min, when T-min is below the threshold; otherwise 0
- Trigger
- 15 freeze degrees (based on local climate and client needs)
- Payout per freeze degree
- USD 10,000
- Cover limit
- USD 1,000,000
During the cover period, the independent data provider reports 8 days in which T-min is below the defined threshold of 32°F.
Hover over a day to see it on the chart
| Day | 31 Dec | 1 Jan | 2 Jan | 3 Feb | 4 Feb | 5 Feb | 6 Feb | 7 Feb |
|---|---|---|---|---|---|---|---|---|
| T-min (°F) | 30 | 28 | 31 | 27.5 | 25 | 22 | 24 | 28 |
| Freeze degrees (FD) | 2 | 4 | 1 | 4.5 | 7 | 10 | 8 | 4 |
| Cumulative FD | 2 | 6 | 7 | 11.5 | 18.5 | 28.5 | 36.5 | 40.5 |
Payout(40.5 cumulative freeze degrees – 15 trigger freeze degrees) × USD 10,000 per freeze degree = USD 255,000
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