Best of both: Bundling parametric with indemnity insurance

Parametric insurance is often bought as a complement to indemnity insurance, but hybrid products combining parametric and indemnity insurance in the same policy launched in 2022. These hybrid products, which represent a big shift in how parametric insurance is being sold, will be judged on uptake and effectiveness in paying out claims. Their performance will reveal how these approaches compare and determine whether hybrid parametric-indemnity insurance becomes a trend.

This article focuses on the advantages of bundling parametric and indemnity insurance into the same policy.

Topics covered:
• A background to parametric insurance.
• Indemnity insurance vs parametric insurance.
• Four ways in which parametric insurance can be structured as a complement to indemnity insurance.
• The benefits of combining parametric with indemnity for commercial insurance.
• Examples of hybrid policies.
• Parametric triggers in personal lines insurance.
• Considerations for insurers and MGAs.