Vortex Weather Insurance has launched a new product called RainSure, designed to provide parametric rain coverage for event organizers. This innovative insurance pays out for every measurable increment of rainfall, starting at just 0.01 inches, allowing policyholders to select a payout threshold that suits their needs.
This approach means that even light rain can trigger compensation, with payments increasing as more rain falls. Policyholders can choose caps based on 0.25 inches, 0.5 inches, or 1 inch of rain. Unlike traditional rain insurance, which only pays out when a specific amount of rain is reached, RainSure offers a tiered payment system. This system allows for compensation at various levels of rainfall, recognizing that different amounts of rain can impact events in different ways.
Andy Klaus, the lead weather index insurance producer at Vortex, emphasized that this product aims to eliminate the uncertainty that often comes with traditional insurance. He stated that even a small amount of rain, like a hundredth of an inch, will result in a payout. This makes it easier for event organizers to manage their financial risks associated with weather.
RainSure is unique in the market as the only parametric escalator rain product. It provides three coverage options that reflect the varying impacts of rain, from light showers to heavy downpours. For example, a small amount of rain might not affect attendance at an outdoor event, but significant rainfall could lead to cancellations and greater financial losses.
To ensure accuracy, rainfall measurements for this policy are verified by WeatherWorks, a trusted independent provider with extensive experience in rainfall measurement. Any recorded rainfall above a trace amount will trigger a payment, simplifying the claims process.
Klaus highlighted the efficiency of parametric weather insurance, noting that it allows for quick payouts without the need for proof of damage or loss. Once the rainfall level is confirmed, payments are made directly to the policyholder, speeding up the recovery process after adverse weather.
The introduction of RainSure reflects a growing trend in the insurance industry towards specialized parametric products that address specific risks. Insurers are increasingly creating tailored solutions to meet the needs of different sectors, such as agriculture and tourism, where weather plays a critical role in operations.
For instance, in Australia, Mainstay Underwriting has developed a parametric hail cover for automotive dealerships, offering payouts based on the size of hailstones. Similarly, Redicova’s Northern Territory Cyclone Cover provides fixed payouts based on a storm’s proximity.
While parametric policies offer quick and transparent payouts based on objective data, they also carry the risk of no payout if conditions fall just short of the threshold. Nonetheless, the broader parametric insurance market is being recognized as a valuable tool for enhancing resilience against climate-related risks, helping organizations better prepare for and recover from weather disruptions.