Category: Parametric insurance

This content is copyright to www.artemis.bm and should not appear anywhere else, or an infringement has occurred.

The Insurance Development Forum (IDF) has completed the design of a parametric flood insurance solution for the Lagos State Government in Nigeria as part of the Tripartite Agreement Programme.

The solution was developed as part of the Tripartite Agreement Programme of the IDF, the United Nations Development Programme (UNDP), and the German Federal Ministry for Economic Cooperation and Development (BMZ) through the InsuResilience Solutions Fund (ISF).

The design of this sub-sovereign risk transfer solution was undertaken by a team of IDF member organisations in partnership with the Lagos State Government, including AXA Climate, Swiss Re, AXA Mansard in Nigeria, flood modeler JBA Risk Management, satellite company ICEYE, and African Risk Capacity Ltd. (ARC Ltd.), supported by the UNDP team in Nigeria.

Partners in Nigeria reportedly include the Lagos State Government, the Lagos State Ministry of Finance, Lagos State Ministry of Budget and Economic Planning, and the Lagos State Emergency Management Agency (LASEMA).

As the IDF explains, flooding in Lagos State disproportionately affects poor and vulnerable populations, while climate change is reportedly increasing the frequency and severity of such events.

“The innovative parametric insurance product is projected to protect up to 4 million people by enabling swift financial support when pre-agreed flood triggers are met, based on satellite flood footprint data. In the event of a catastrophic flood, the product could provide access to up to USD 7.5 million in coverage,” the IDF commented.

Use of the product will allow the Lagos State Government to access funds to support emergency response efforts, including disaster relief and direct cash transfers to affected communities.

“The product forms a key part of Lagos State’s wider flood risk management and climate resilience strategy. UNDP is supporting the Government of Nigeria to scale the flood insurance project to a national scheme,  developing a National Disaster Risk Finance Strategy and contributing to the integration of risk finance into Nigeria’s Nationally Determined Contribution (NDC) 3.0,” the IDF explained.

The IDF has also confirmed that regulatory approval for the product has been obtained, with the next steps set to include the state government arranging premium financing options, which will facilitate the integration of the product into Lagos State’s catastrophe contingency and fiscal planning frameworks.

Dr Oreoluwa Finnih, Special Adviser to the Governor of Lagos State on Sustainable Development Goals, commented: “The delivery of this parametric flood insurance solution is a vital milestone in strengthening Nigeria’s adaptation to manage climate risk. It exemplifies the innovative public-private partnerships needed to build fiscal resilience and help communities prepare for climate impacts. We look forward to seeing this product implemented and protection in place for Lagos State.”

Ivo Menzinger, Chair of the IDF Operating Committee, Managing Director and Executive Advisor at Swiss Re, said: “This milestone demonstrates the power of collaboration between  government, insurance, and development partners. The design phase harnessed the industry’s technical  expertise in flood risk modelling and parametric insurance to develop a tailored, scalable  solution for Lagos. We are committed to supporting local ownership as this solution moves  towards regulatory approval and integration into government systems.”

Dr. Annette Detken, Head of the InsuResilience Solutions Fund (ISF), added: “This achievement marks a pivotal step in our mission to build climate resilience through innovative risk financing. By supporting the development of this parametric flood insurance solution for Lagos State, the ISF is helping to unlock timely and reliable financial protection for those vulnerable to climate-related disasters. This is precisely the kind of locally owned, scalable solution the Tripartite Programme was designed to deliver, one that strengthens systems, builds capacity, and lays the foundation for long-term resilience in Nigeria.”

IDF designs parametric flood insurance product for Lagos State Government was published by: www.Artemis.bm
Our catastrophe bond deal directory
Sign up for our free weekly email newsletter here.

This content is copyright to www.artemis.bm and should not appear anywhere else, or an infringement has occurred.

Gallagher Re, the global reinsurance broker, on behalf of the Southeast Asia Disaster Risk Insurance Facility (SEADRIF Insurance Company), has structured and placed a parametric re/insurance programme for the government of Lao PDR.

According to the broker, the two-year policy expands the original 2021 flood-only placement, to include additional perils such as typhoons, earthquakes, and landslides.

The policy was established on May 3, 2025 and provides up to $16 million in aggregate parametric protection.

Moreover, the policy’s payout triggering mechanism is based on actual, reported loss information aggregated at the national level, which makes it one of the first, globally, to use a government-reported impact-based trigger.

Gallagher Re also explained that the parametric structure is triggered by the number of people that are affected by a covered peril, which established domestic agency, the National Disaster Management Office (NDMO), independently reports.

The reports are typically available within days after an event, and their use as a parametric trigger for financial response is backed by advanced analytical work carried out by Gallagher Re.

“This new type of trigger was required because traditional hazard-based markers are unable to fully capture the variety and complexity of flood and other catastrophe events in the region,” commented Gallagher Re.

The resulting NDMO-based framework helps to address both SEADRIF and the government of Lao PDR’s needs for financial protection products which closely align with the observed impacts on livelihoods.

“The product shows great potential to be further scaled up and to help reduce the protection gap in the region in the future,” Gallagher Re added.

“Gallagher Re is proud to have collaborated with SEADRIF on renewing this groundbreaking product. This achievement was underpinned by comprehensive analytical work and close consultations with clients and markets,” commented Antoine Bavandi, Global Head of Public Sector, Parametric & Climate Resilience Solutions at Gallagher Re.

Adding: “Our innovative parametric set-up further pushes the boundaries of disaster risk finance and represents a solution that is both simple and more reliable. It captures the complexities of extreme catastrophe events such as flooding whilst minimizing basis risk. It shows great potential for replicability in flood-prone countries and we look forward to further expanding it with SEADRIF in the region.”

“We appreciate the technical leadership of Gallagher Re in bringing this enhanced policy to reality. This milestone represents not only a significant achievement for SEADRIF but also an advancement in parametric insurance products,” said Benedikt Signer, Executive Director of SEADRIF Insurance Company.

“We are committed to serving all ASEAN member countries and making a meaningful impact to protect vulnerable populations and fostering sustainable development. We look forward to our continued partnership with Gallagher Re to expand our impact,” Signer concludes.

Gallagher Re structures and places innovative multi-peril parametric policy for SEADRIF and Lao PDR was published by: www.Artemis.bm
Our catastrophe bond deal directory
Sign up for our free weekly email newsletter here.

This content is copyright to www.artemis.bm and should not appear anywhere else, or an infringement has occurred.

Reask, the catastrophe modelling and climate analytics specialist, has announced that it has launched a new alert service that gives insurers and catastrophe modelling teams early, region-specific insight into developing storms using advanced windfield forecasting.

The alert service combines official agency tracks with Reask’s proprietary 1km resolution windfield overlays, delivering pre-landfall updates that are tailored towards selected regions.

Reask’s new alert system is powered by LiveCyc, the organisation’s probabilistic forecast model, which has the ability to generate 1,000 scientifically plausible storm scenarios using agency forecasts, real-time climate signals, and decades of historical data.

These are then processed through the company’s peer-reviewed, 1km resolution wind model to produce a localised, probabilistic view of damaging winds, which will ultimately help insurers improve early loss estimations and prepare for events with better confidence.

Risk professionals can sign up to use this service, where they can select their regions of interest, and receive alerts by email as storms develop, with no platform or login required.

According to Reask, the alert system provides global coverage across all major tropical cyclone basins including the North Atlantic, North Indian Ocean, Eastern and Central North Pacific, South West Indian Ocean, Western North Pacific, Australian and South Pacific Ocean, and Global.

Each alert reportedly offers a summary of the storm’s name and identifier, its forecast issuance time and source agency, expected landfall region, official agency forecast track, as well as Reask’s high-resolution 1km windfield overlay.

However, while this provides a quick overview of potential wind impacts, users can also request access to Reask’s full pre-landfall forecasting suite if a more deeper analysis is needed.

Furthermore, Reask also noted that the increasing unpredictability of severe weather events has made traditional forecast tools less adequate for insurance-related decisions.

Thomas Loridan, Chief Science Officer at Reask, commented: “As climate volatility rises, relying on pre-computed data and single-track forecasts just isn’t enough to protect portfolios. Our pre-landfall forecast data is generated on the fly, grounded in physics and built specifically for exposure modelling — it’s a more reliable way to see what’s coming and act early.”

A recent instance showcasing the tool in action occurred in 2024, when US-based managing general agent Vave used the complete suite in preparation for Hurricane Helene.

Combining Reask’s forecasts with its internal exposure data, Vave was able to estimate loss ranges 48 hours before landfall, as well as monitor how risk shifted with forecast updates, and approach landfall day with a better picture of possible outcomes.

Furthermore, Reask also works with a number of leading insurance-linked securities (ILS) managers, providing them with its modelling and analytics capabilities.

Reask unveils global tropical cyclone alert service for insurers and cat modellers was published by: www.Artemis.bm
Our catastrophe bond deal directory
Sign up for our free weekly email newsletter here.

This content is copyright to www.artemis.bm and should not appear anywhere else, or an infringement has occurred.

The Japan branch of HDI Global SE, part of Germany-based insurer Talanx AG, in collaboration with Descartes Underwriting, the parametric risk transfer specialist, has received authorisation from the Japanese Financial Services Agency to introduce parametric earthquake insurance coverage to the Japanese market.

To create this product, HDI Global teamed with Descartes Underwriting, a provider of parametric insurance solutions for natural catastrophe risks. The development also involved HDI Enablers, HDI Global’s unit focused on Risk Finance solutions.

According to the announcement, this parametric coverage has been designed to address gaps in coverage for Japanese businesses affected by earthquakes.

The coverage offers protection for various types of losses linked to earthquake events, including property damage, direct and contingent business interruption, and non-physical impacts. The product does not require a deductible or minimum loss amount.

Structured by Descartes, leveraging their expertise in natural catastrophe risk, the insurance coverage operates on predefined criteria. Claim eligibility is determined by seismic intensity readings based on the Shindo scale used by the Japan Meteorological Agency.

Once the set thresholds are reached, a fixed payment is issued based on a simple declaration, with this approach enabling for a faster process compared to conventional insurance models and can also account for non-physical losses. Policy terms, which includes triggers and payout conditions, are outlined in a clear and accessible format.

In addition, this new parametric earthquake product will reportedly be distributed through an expansive network of experienced insurance brokers and agencies across Japan.

Descartes’ Director in Japan, Ikuya Shimada, will act as Descartes local representative for this initiative.

Dr Dirk Höring, Member of the HDI Global SE Executive Board, responsible for Property Insurance, Engineering Insurance, Marine Insurance, HDI Risk Consulting, said: “The Japanese insurance market landscape is in the middle of a structural change. Regulatory bodies are fostering heightened competition amongst major local insurers and encouraging the introduction of new insurance solutions to further improve customer protection.”

Adding: “Acting as the preferred Partner in Transformation for our clients, the timing is ideal to deliver this innovative parametric earthquake solution and address longstanding coverage gaps in the Japanese market.”

Casey Sandler, Interim Managing Director of HDI Global’s Tokyo office, commented: “It is a privilege to be able to provide this much overdue protection to our clients in Japan. The ever-present earthquake risk in Japan remains a challenge for businesses. Now the aspect of a coverage gap is drastically reduced by our innovative parametric solution.”

Violaine Raybaud, Chief Operating Officer of Descartes Underwriting, added: “Descartes is honored to further contribute to the resilience of the Japanese economy, given the suitability of our core parametric approach to earthquake risk. We are pleased to collaborate with HDI Global alongside our strategic partner Generali Global Corporate & Commercial, which will act as a key reinsurer of this new product. Together we have delivered a step-change in earthquake protection to the benefits of Japanese insurance ecosystem.”

HDI Global SE & Descartes receive approval to provide parametric earthquake insurance in Japan was published by: www.Artemis.bm
Our catastrophe bond deal directory
Sign up for our free weekly email newsletter here.

This content is copyright to www.artemis.bm and should not appear anywhere else, or an infringement has occurred.

The CCRIF SPC (formerly the Caribbean Catastrophe Risk Insurance Facility), in collaboration with CelsiusPro and its subsidiary Global Parametrics, has launched the CCRIF Microinsurance Facility, along with the underlying digital insurance administrative platform solution, the White Label Platform.

According to the announcement, this platform will facilitate the administration of microinsurance products, (such as product pricing, risk capacity management, policy management and settlement of claims), enabling multiple insurers to partner with CCRIF to roll out and market microinsurance products to new and existing customers.

This initiative is being supported with a grant from the Natural Disaster Fund (NDF), which is a blended risk transfer vehicle designed to mitigate the challenges in climate and natural catastrophes resilience for low-and-middle-income countries.

CCRIF Chief Executive Officer Isaac Anthony stated that the company is well positioned to provide a platform to scale up microinsurance offerings in the countries that it has provided parametric insurance coverage to for over the last 18 years.

The organisation provides coverage to 30 members in the Caribbean and Central America.

Since its inception in 2007, CCRIF has made 78 payouts totalling US$390 million. CCRIF today also has seven parametric insurance products for tropical cyclones, excess rainfall, fluvial flooding, earthquakes, and for the electric, water and fisheries sectors.

“The CCRIF Microinsurance Facility will bring microinsurance or inclusive insurance into the hands of millions of persons across the Caribbean (and later on to Central America), thereby protecting lives and livelihoods in the face of the increasing frequency, intensity and unpredictability of hydrometeorological events associated with climate change that are bringing many hardships to low-income groups,” Anthony said.

Mark Rueegg, CEO of CelsiusPro, commented: “We are grateful for the support of the Natural Disaster Fund to equip CCRIF and their partners with CelsiusPro’s advanced parametric insurance technology. Our White Label Platform will help build an insurance ecosystem that reaches vulnerable communities across all CCRIF member countries.”

According to CCRIF, the first product that is set to be offered by the Microinsurance Facility through the CelsiusPro White Label Platform is the Livelihood Protection Policy (LPP), a parametric weather index-based insurance product that reportedly offers insurance coverage for wind associated with tropical storms and hurricanes, and rainfall that occurs any time during the year.

CCRIF confirmed that the Livelihood Protection Policy will initially be rolled out in five countries: Belize, Grenada, Jamaica, Saint Lucia, and Trinidad & Tobago.

“It is designed to protect the livelihoods of vulnerable, low-income individuals by providing quick cash payouts following extreme weather events. Payouts are tied to a series of thresholds for wind speed and rainfall and can therefore be made very quickly (within 14 days as is customary for CCRIF’s other parametric insurance policies), as there is no need to undertake on-the-ground damage or impact assessments,” CCRIF noted.

The LPP is designed to support small farmers, fishers, market vendors, food vendors, day labourers, construction workers, tourism workers, along with owners of micro and small businesses.

This current version of the LPP is underpinned by CCRIF’s state-of-the-art parametric insurance models, which are specifically customised for the Caribbean and Central America.

“Payouts under the LPP will help persons to get their “livelihood” back on track without them having to wait for help from “external” sources such as the Government, friends, family, or from remittances etc. For example, if a farmer purchases the LPP, he or she will have a source of immediate funding to undertake activities such as draining fields, replanting, and reconstructing irrigation systems if the insurance policy triggers,” CCRIF explained.

CCRIF also noted that the LPP will not only just play a key role towards closing the protection gap, but it will also provide a level of financial stability for low-income groups through the injection of quick liquidity or cash payouts, allowing them to avoid adopting coping strategies that could lead them into poverty.

“The LPP will also help to improve the credit worthiness of individuals in the long term, giving them access to financial services that they previously may not have had access to,” CCRIF added.

“The LPP will also play a key role in supporting governments’ policy goals related to financial inclusion – enabling underserved persons to participate in the financial system and over time benefit from the various services that the financial sector provides,” CCRIF concluded.

CCRIF partners with CelsiusPro and Global Parametrics to launch microinsurance initiative was published by: www.Artemis.bm
Our catastrophe bond deal directory
Sign up for our free weekly email newsletter here.

This content is copyright to www.artemis.bm and should not appear anywhere else, or an infringement has occurred.

Estimated insured losses from Hurricane Erick, which struck Mexico’s Pacific coast last week, are expected to fall well bellow the US$1.97 billion insured losses from 2023’s Hurricane Otis, according to global ratings agency AM Best.

In a new report, AM Best notes that losses from Erick are expected to be contained, with parametric insurance contracts unlikely to be triggered.

However, the agency warns that the current reinsurance market cycle could be further hardened by both Hurricane Erick and the ongoing trend of tropical storms rapidly intensifying into severe hurricanes due to rising ocean temperatures.

As we had reported, Erick rapidly intensified into a major hurricane as it approached landfall on Mexico’s Pacific coast, which for a time put the World Bank facilitated $175 million IBRD CAR Mexico 2024 (Pacific) parametric catastrophe bond on-watch.

As we later explained, the NHC reported that the minimum central pressure of hurricane Erick was 950mb at landfall, having risen as it neared the coast, which reduced the risk to the cat bond and left us believing it was unlikely to be affected by the storm.

We then later reported, that catastrophe bond and ILS investment manager Twelve Securis had confirmed that it does is not anticipate any impact to the World Bank catastrophe bond or any of the firm’s private ILS positions due to losses caused by Erick.

“In AM Best’s view, estimated insurance industry losses for Hurricane Erick will fall well below the USD 1.97 billion in insured losses from Hurricane Otis in 2023. However, storm damage from Hurricane Erick continues to be assessed as it was the strongest hurricane ever recorded along Mexico’s Pacific coast this early in hurricane season,” AM Best explained.

The agency noted that for most insurers with exposure in the affected Oaxaca and Guerrero states, the primary impact will likely stem from business interruption losses due to prolonged power outages, flooding, and food shortages.

“Lesser material losses are expected for commercial and residential infrastructure, as well as high-value hotels and resorts. The hurricane had reached Category 4 status before tapering off to a Category 3 storm at landfall,” the agency added.

“Mexico’s insurance industry is strongly capitalized and has sound levels of catastrophic provisions aimed at mitigating the effect,” said Salvador Smith associate director, AM Best.

Adding: “We’ll continue to monitor the financial impact of Hurricane Erick on rated companies, as well as credit risk with counterparts and liquidity among rated insurers.”

Hurricane Erick insured losses expected to fall ‘well below’ Otis: AM Best was published by: www.Artemis.bm
Our catastrophe bond deal directory
Sign up for our free weekly email newsletter here.

This content is copyright to www.artemis.bm and should not appear anywhere else, or an infringement has occurred.

Descartes Underwriting, the parametric risk transfer specialist, has announced the launch of a new fully customisable Flood-at-Location parametric flood insurance product for U.S. commercial customers.

Backed by extensive research in flood modeling and advanced sensor systems, Descartes explained that its new offering upends the traditional approach to flood insurance, aiming to deliver better protection for businesses, investors, and homeowners associations.

According to the firm, the product provides coverage for any economic losses resulting from fluvial, pluvial and coastal flooding, with limits of up to $70 million available. Descartes also explained that payment is usually received by the insured within days.

Additionally, coverage can be tailored for one or more locations, and policies can be structured with flexible durations to match project timelines or client preferences, including multi-year terms.

“Additionally, any type of business and industry class may be covered. Any economic loss sustained is insured, including property damage, business interruption, and extra expenses. No direct physical damage is required to trigger a payout,” Descartes noted.

The firm continued: “Most importantly, companies with high historical flood losses–oftentimes facing the toughest renewal conditions–gain access to a customized, stable insurance solution. Policies are available in the surplus lines market in all 50 states.”

“Flood is often excluded or sub-limited in regular property policies and therefore may require stand-alone flood coverage. Flood-at-Location from Descartes is a superb supplement to Property All Risks insurance. It provides coverage for risks which the National Flood Insurance Program (NFIP) excludes (such as docks, piers, etc.) and can be designed to respond in excess of NFIP’s $500,000 limit, with a cost-efficient structure,” Descartes further explained.

Daniel Vetter, Head of Americas for Descartes, commented: “This responsive and remarkable new product delivers unparalleled, flexible flood coverage for commercial properties. For all the reasons that conventional insurance for flood is sometimes unsatisfactory–slow claims payments, exclusions, sub-limits, or a lack of availability–this parametric product will fill the existing gap we’re seeing in the market.”

Kevin Dedieu, Co-founder and Chief Scientific Officer of Descartes, said: “This market-leading coverage follows intensive research and development conducted by Descartes in-house and with our technology partners. We developed this product because our brokers shared with us that commercial flood products available at the time did not meet their clients’ needs. We utilized our scientific approach to create this new, highly responsive product which leaves no gaps uninsured.”

Descartes expands US flood coverage with new parametric insurance offering was published by: www.Artemis.bm
Our catastrophe bond deal directory
Sign up for our free weekly email newsletter here.

This content is copyright to www.artemis.bm and should not appear anywhere else, or an infringement has occurred.

The Government of Grenada has renewed its annual parametric insurance coverage with the Caribbean Catastrophe Risk Insurance Facility Segregated Portfolio Company (CCRIF SPC) for the 2025/2026 policy year, for a total cost of roughly US$1.828 million, plus applicable fees.

This renewal provides the Caribbean country with protection against a range of natural hazards, including tropical cyclones, earthquakes, excess rainfall, and coastal hazards under CCRIF SPC’s parametric policies.

Grenada has been a member of CCRIF SPC since 2007, recognising the importance of financial readiness in responding to climate and seismic events.

The parametric insurance model offered by CCRIF ensures rapid disbursement of funds following qualifying events, allowing for swift response and recovery efforts when disasters strike.

This year’s renewal follows a record payout received in 2024, when Grenada was severely impacted by Hurricane Beryl. The country received over US$44 million from CCRIF SPC, as the storm triggered the tropical cyclone, excess rainfall, and coastal hazards parametric insurance policies.

However, this figure went on to increase to US$55.6 million after payouts were made to the Grenada Electricity Services Limited (GRENLEC) and the National Water and Sewerage Authority (NAWASA) under their policies.

The funds were used to support recovery efforts across Carriacou, Petite Martinique, and northern Grenada, areas where more than 90% of buildings were damaged.

Additionally, the funds also helped finance urgent repairs to public infrastructure, schools, hospitals, and homes, and facilitated the distribution of essential supplies such as food, water, and medicine.

The Government of Grenada’s Ministry of Finance, commented: “This strategic investment reflects our unwavering commitment to building resilience, ensuring fiscal responsibility, and safeguarding the lives and livelihoods of our citizens. As climate change intensifies, natural disasters will continue to affect Grenada, prompting the country to take proactive steps to prepare and protect its people, resources and the economy.”

Concluding: “The Government of Grenada expresses its gratitude to CCRIF SPC for its ongoing partnership and remains steadfast in its mission to enhance national resilience and reduce vulnerability to natural hazards.”

Grenada renews parametric insurance coverage with CCRIF for 2025/26 was published by: www.Artemis.bm
Our catastrophe bond deal directory
Sign up for our free weekly email newsletter here.

This content is copyright to www.artemis.bm and should not appear anywhere else, or an infringement has occurred.

Twelve Securis, the specialist insurance-linked securities investment manager, is not anticipating any impact to the World Bank catastrophe bond or any of the firm’s private ILS positions due to losses caused by major hurricane Erick in Mexico yesterday.

As we had reported, Erick rapidly intensified into a major hurricane as it approached landfall on Mexico’s Pacific coast, which for a time put the World Bank facilitated $175 million IBRD CAR Mexico 2024 (Pacific) parametric catastrophe bond on-watch.

However, as we later explained, the NHC reported that the minimum central pressure of hurricane Erick was 950mb at landfall, having risen as it neared the coast, which reduced the risk to the cat bond and left us believing it was unlikely to be affected by the storm.

Now, catastrophe bond and ILS investment manager Twelve Securis has confirmed that it does not believe this catastrophe bond faces any threat.

The company explained, “In the cat bond market, the primary exposure to Mexican Pacific storms comes from a single bond issued by International Bank for Reconstruction and Development (IBRD), which features a parametric trigger based on the storm’s reported central pressure. Based on the latest pressure estimates from the designated reporting agent, we do not expect any impact to this bond or to any positions held by Twelve Securis.”

Twelve Securis also said it does not anticipate losses from hurricane Erick affecting any of the private ILS positions it holds in its portfolios.

“Likewise, no impact is expected to any Private ILS positions managed by Twelve Securis as a result of Hurricane Erick,” the company said.

Private ILS positions typically feature collateralized or transformed reinsurance and retrocession arrangements. Other market sources we’ve spoken with have also told us they believe it unlikely any positions they held would be affected by this hurricane.

Hurricane Erick did cause meaningful damage to the region it made landfall in and wider-spread flooding and landslides. As a result, there will be insured losses and potentially some traditional reinsurance impact, but with the majority of ILS capital deployed higher in reinsurance towers, or having far less exposure to Mexico than to the United States, the effects on this market will be limited at most.

It’s worth noting though, that had Erick intensified further or made landfall in an area of greater insured value concentration on the Mexican coast, such as Acapulco, then it would likely have been a different story, with the cat bond perhaps triggered and some ILS other capital perhaps also paying out to assist the country in its recovery from the storm.

Hurricane Erick: No cat bond or private ILS impact expected by Twelve Securis was published by: www.Artemis.bm
Our catastrophe bond deal directory
Sign up for our free weekly email newsletter here.

This content is copyright to www.artemis.bm and should not appear anywhere else, or an infringement has occurred.

Major hurricane Erick has made landfall on the coast of Mexico with 125 mph sustained winds in the state of Oaxaca and the NHC reports the minimum central pressure at 950mb, which is above the level where the World Bank facilitated $175 million IBRD CAR Mexico 2024 (Pacific) parametric catastrophe bond would be triggered.

As we reported earlier this morning, hurricane Erick intensified rapidly to become a major category 4 storm, with sustained winds of over 140 mph and a minimum central pressure estimated at 939mb.

As we said in our earlier article, that central pressure was only two millibars above the level needed to activate a partial payout from the IBRD Mexico Pacific coast hurricane catastrophe bond.

The trigger threshold where a payout would be due from the World Bank parametric catastrophe bond, which provides Pacific coast named storm disaster insurance to the government of Mexico, is for a storm with a central pressure at or below 937mb to breach the parametric named storm box drawn near to the coastline.

As we said in our second update on the hurricane’s potential threat to the catastrophe bond, as of 09:00 UTC the National Hurricane Center had updated its estimate to a 940mb minimum central pressure, so slightly higher.

Now, with dangerous major hurricane Erick having made landfall, the minimum central pressure at that time, 12:00 UTC, is reported at an estimated 950mb, so higher still and further away from the threshold for the parametric cat bond to face a payout.

It’s important to note that there could still be some uncertainty, but sources we’ve now spoken with in the last hour do not believe the catastrophe bond will face a payout, unless the reported central pressures were revised down.

Suggesting that, investors will now view the risk to Mexico’s Pacific coast named storm catastrophe bond as greatly reduced. Although the view of risk may not subside completely until some analysis on how the central pressure extrapolates along hurricane Erick’s track, at the point it would have breached the parametric box for the cat bond, has been completed.

But, with the central pressure so much higher at landfall and never having been reported as low as would have been needed to trigger the cat bond, it’s possible that an official calculation agent report may not even be deemed necessary for this hurricane event.

Significant impacts are anticipated for the landfall region from hurricane force winds and storm surge, while double digit inches of rainfall are anticipated further inland, so the threat to the local area remains meaningful.

However, the mountainous region of Oaxaca, Mexico where landfall has occurred is expected to degrade hurricane Erick rapidly now.

You can read all about the IBRD CAR Mexico 2024 (Pacific) catastrophe bond and more than 1,000 other cat bond transactions in the extensive Artemis Deal Directory.

Hurricane Erick makes landfall in Mexico at 950mb, reducing risk to World Bank cat bond was published by: www.Artemis.bm
Our catastrophe bond deal directory
Sign up for our free weekly email newsletter here.