Swiss Re backs USD350m Guangdong parametric disaster pilot

Global reinsurance firm Swiss Re has sealed an agreement with the Chinese province of Guangdong to be the sole reinsurer for a parametric disaster insurance pilot providing USD350 million of protection against tropical cyclone and excess rainfall for seven prefectures in the region.

The first payout under the new Guangdong parametric disaster insurance cover has already been triggered as well, after super typhoon Haima struck the city of Shanwei. The payout was made in less than a week, further demonstrating the key role that parametric triggers can play in insurance or reinsurance arrangements.

The pilot insurance facility uses parametric triggers based on meteorological data to enable rapid payouts of claims. The pilot was developed in response to the Chinese governments desire to better protect the nation against natural disasters and severe weather.

Rainfall data and tropical cyclone wind speed indices are used to trigger policy claims, ensuring the fast parametric payout.