SIRC 2026: Parametrics should earn a place in a program on merit: Swiss Re

November 4 2026 by

Insurers are increasingly turning to parametric solutions for selected layers, above certain retentions or limits, or for specific exposures where a predictable response to an event is particularly valuable, according to Marcel Andriesse, head of the agriculture centre and parametrics at Swiss Re.  

“Parametric is gaining traction in reinsurance, but its role remains quite specific,” Andriesse said.  

“Traditional indemnity reinsurance continues to form the foundation of most programs. Parametric complements that protection where speed, transparency and a clearly defined payout offer a particular advantage.”  

He stressed, however, that “parametric should earn its place in a program on its merits”. 

While Andriesse said that there are credible opportunities in renewables, agriculture and nat cats, he pointed to low river levels disrupting transport, wildfires or heatwaves affecting tourism, extreme heat and weather-related BI without physical damage as areas that could see parametrics being deployed. 

Barriers to adoption

Cost, data and modelling challenges, and basis risk have traditionally been highlighted as barriers to wider adoption. 

Andriesse argued that while price matters, the cost of delivering insurance must be separated from the cost of the risk itself.  

“The goal is accessible, efficient insurance with sustainable pricing, rather than a cheaper solution that fails to meet clients’ protection needs,” he said. 

Technology is transforming the picture, with thousands of satellites launched each year, providing unprecedented amounts of data.  

“Combined with AI, which can analyse this information rapidly and at relatively low cost, this is transforming risk monitoring, underwriting and claims assessment,” Andriesse said.  

“It enables scalable insurance solutions that would have been technically or commercially impractical just a decade ago.” 

But technology cannot make the underlying risk disappear. 

“A softer insurance market should not lead us to underestimate the hazard,” Andriesse added.  

Basis risk, in practice, has proven less problematic than many expected. 

In flooding, for example, radar satellites from companies such as ICEYE can identify inundated areas at a resolution of a few metres, even at night or through cloud cover. 

 “This information can support parametric payouts based on actual flooding rather than rainfall or river levels alone, potentially reducing basis risk,” he said.  

With AI and before-and-after satellite observations, it can also help identify affected properties, prioritise claims and guide loss adjusters and it makes traditional claims handling faster and more transparent.  

The key, Andriesse said, “is to measure something objectively observable and closely linked to the client’s actual financial loss”. 

The bigger challenges are modelling an increasingly unpredictable climate and ensuring reliable product operations, particularly when satellite observations or other data sources become unavailable or experience disruptions.  

Changing climate conditions make such programs both more important and more challenging. 

“In our analysis for France, drought conditions comparable to 2003 were historically around a 1-in-24-year event, but have become approximately a 1-in-4-year event under today’s climate. This illustrates how dramatically the risk landscape is changing. We cannot price tomorrow’s drought insurance using yesterday’s climate,” Andriesse said.  

Parametric insurance also has potential to fund prevention, not just compensation, avoiding a major loss being better than paying for it afterwards.  

“A fire-weather trigger could release money for extra patrols, vegetation management or temporary closures before a serious wildfire develops. Drought triggers could similarly finance emergency irrigation, water supplies for livestock, or early assistance to vulnerable communities, as we already do in partnership with the World Food Programme,” Andriesse added.  

Government partnerships can make the solutions accessible, while keeping the underlying risk transfer sustainable. 

Looking ahead, Andriesse expects more hybrid solutions combining parametric triggers, satellite and AI-supported claims assessment, and traditional insurance expertise.  

Softer market conditions may influence pricing, but they do not change the underlying need for faster, more transparent and more comprehensive protection.  

“The interesting development is that traditional and parametric insurance are becoming increasingly complementary,” he said.

“The opportunity is not one versus the other but combining their strengths to provide better protection.” Marcel Andriesse, Swiss Re 

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