While there are several merits to parametric insurance, it can be difficult to know whether it is right for your clients.

One option is to define the risks relating to an earthquake scenario and thinking about how parametric insurance could help close any gaps in insurance coverage. Considering these five questions can help to determine if parametric insurance is a good match for your clients.

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1. Does your client consider earthquake risk to be a material exposure in their overall business risk profile (i.e. have assets and supply chain exposures)?

2. Does your client have limited financial capacity (i.e. retained profits, cash in the bank) built into their business continuity plan to proactively respond and recover from an earthquake?

3. When thinking about an earthquake event, does your client have any protection gaps, excess deductibles, deferment periods, or exclusions in their traditional program that they would prefer to be insured?

4. Does your client struggle to find cover for potentially large financial losses that are unrelated to physical asset loss (i.e. prevention of access, staff wellbeing, loss of productivity, intangible assets)?

5. Would your client benefit from insurance cover that offers a faster claims processing time and greater certainty around payouts during an earthquake crisis?

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If the answer to any of these questions is yes, it is likely that parametric insurance can add value to your customers.

Indeed, parametric insurance can provide flexible and transparent coverage alongside traditional insurance to improve the customers risk profile and strengthen their financial resilience during an earthquake crisis.