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Parametric Insurance: A Modern Approach to Risk Transfer

Parametric insurance is an innovative risk management solution designed to provide faster, more transparent payouts compared to traditional indemnity-based insurance. Unlike conventional insurance policies that compensate for actual losses after lengthy claims assessments, parametric insurance pays out based on the occurrence of a predefined event or “trigger.” These triggers are usually objective, measurable parameters such as rainfall levels, wind speed, earthquake magnitude, or temperature thresholds.