Parametric insurance: Barking up the wrong tree?
TOI Blogs
January 8, 2026
LinkedIn post: https://www.linkedin.com/feed/update/urn:li:activity:7414892488957575169/
In a recent piece (https://lnkd.in/dZrWQ8SR) I pointed out it was time to revisit vestiges of the yore. Notwithstanding opening up of the insurance biz, knock-for-knock agreement remains embedded in the system. But in this instance, in our rush to rid ‘price controls’ – we also threw away a semblance of risk management practices. That was 25 years ago.
Besieged by a rising frequency and severity of climate risk – just when a new #riskmanagement order ought to be in place – we believe #parametric is the mantra to chant. As a procedure it sounds good and may provide short-term liquidity.
However, substantively they do nothing to reduce underlying risk. Without steep cuts to #globalemissions, storms like Melissa – which recently devastated Jamaica – will intensify, eroding the viability of these financial products altogether. I quote Lisa Sachs, Director, Columbia Center on Sustainable Investment & Columbia Climate School.
Aren’t we barking up the wrong tree?
The Diversity Blog 