STORM

A parametric data-based insurance solution
Clients exposed to catastrophic named windstorm risk often face gaps in coverage in the
traditional insurance marketplace. Swiss Re Corporate Solutions offers tailor made parametricsolutions to complement traditional programs that cover a broad range of economic losses
related to a named windstorm event.
What is parametric insurance?
̤ Parametric policies are policies that pay out
when a named windstorm event meets orexceeds a certain wind speed, and theinsured incurs losses.

What key differences from traditionalinsurance̤ Traditional insurance is indemnity based,
and coverage is based on deductibles,sublimits, and precise policy terms andconditions. Claims are paid when losses
exceed the retention held by the insured,and settlement can take months or years.
̤ Parametric insurance is index-based,
meaning coverage is triggered if
predefined event parameters are met orexceeded. The parametric trigger is set in amanner that if it is triggered, it is highly
likely the insured would sustain actual loss.
There is no claims adjustment process todetermine the value of the loss; as a result,the policy pays very quickly.

About STORM̤ Our proprietary STORM product is unique inthe marketplace. We tailor each parametricpolicy so that closely mirrors the insured’s
experience during a windstorm. Following a
named windstorm event in the United Statesor the Caribbean, RMS HWind produces agranular wind footprint, allowing us todetermine the highest one-minute sustained

wind speed closest to the policyholder’slocation(s). The policy pays out based on
the intensity of the event as the insured
experiences it.
̤ STORM parametric solutions are highly
customizable. Limits can be spread acrossmultiple locations, and triggers can beadjusted to reflect the insured’s interestsand budget.
̤ Once terms are agreed and pricing is
finalized, the policy is bound. If a named
windstorm event occurs and the insured
sustains a loss related to that event, they
notify Swiss Re Corporate Solutions. We
determine whether there is coverage basedon third party data; and a payout is made.

What can the payout be used for?
̤ Fill in the traditional insurance deductible.
̤ Cover business interruption even
if there is no direct physical loss or damage(i.e. physical property is not significantly
damaged, but revenues decrease due totemporary loss of attraction).
̤ Fund losses from sublimited or excluded
coverage including beach erosion,
landscaping, golf and tennis courts, light
structures and others can be recovered
using the parametric payout.
̤ Cover increased operating costs following
an event.
̤ Liquidity for emergency response andimmediate needs following the storm for
faster recovery.

Key facts & benefits
Policy limits
Up to USD 50m per event;larger limits can be explored.
PayoutWithin 30 days following
an event.
Broad coverage
Payouts can be used forproperty replacement, repair
costs, business expenses, lostrevenue, and other immediate
economic needs.
Transparent loss settlement
A payout is determinedby physical parameters
as provided by an independent
third party.
Proof of loss
Simple confirmation oftotal loss amount, signedby an officer of the company;no receipts required.
Coverage terms
1–3 years
No dollar or percentage
deductible

2 Swiss Re Corporate Solutions STORM – A parametric data-based insurance solution

Swiss Re Corporate Solutions’ proprietary STORM
product uses RMS HWind as a third party data provider.
HWind produces a granular wind footprint, allowing us tocalculate wind speed closest to the insured’s location(s).
For insureds with multiple locations, limit can be allocatedbased on their needs.
Sample Client/Scenario̤ Single location property seeking
parametric cover̤ Wind speed reported at the location
provided by RMS HWind̤ Limit per occurrence: USD 5m
̤ Term aggregate limit: USD 5m
̤ Optional reinstatement limit at 125%of the original premium̤ Trigger location: 26.475°, -82.255°(near Boca Grande, FL)̤ Payout is based on the table below:
Max 1-Min SustainedWind Speed

Payout(% of limit)

65–75 MPH

5%75–85 MPH

15%

85–95 MPH

50%

95–105 MPH

75%

105+

100%

Once terms are agreed and pricing is finalized,
the policy is bound. If a named windstorm
event occurs near the insured’s location andthey sustain a loss, the insured notifies Swiss
Re Corporate Solutions. We calculate whether
there is coverage based on third party dataand a payout is made.
Sample Single Location with Hurricane Charleywind footprint overlay; Max 1-min sustained
wind speed at this location during Hurricane
Charley was 104.28 MPH, which would haveresulted in a 75% policy payout.

Confidentiality Notice and Disclaimer
RMS invests substantial time and financial resources indeveloping its proprietary applications, models and data.
Information concerning RMS applications, models anddata is protected under trade secret laws, among otherintellectual property rights. Recipients of the information
contained herein must keep it strictly confidential and must
not disclose this information to any third party.

75% p/o USD 5m limit = USD 3.75m payout
within 30 days following the event. Remainderof the annual limit available for future storms
during the policy term.

How is STORMTM different from other parametric solutions?
Parametric solutions have existed in the market
for several years; however, there is basis risk –the risk that the payout does not accuratelyreflect the severity of the event – associatedwith other options.

Cat-in-the-Box/Circle
Policy is triggered if the eye of a named
windstorm passes through a circle (or othergeometry) and exceeds the intensity definedin the policy. There is high basis risk
associated with this structure, since a cat-inthe-box only considers if the storm trackpasses through the geometry, and theintensity at its center. The structure does notconsider the impacts over an area, at theinsured’s locations. The storm center can missthe geometry, while bringing damaging wind
to the insured’s area.

Fixed Anemometer
A named windstorm passes by nearest
anemometer to insured’s asset, exceedinga certain wind speed.
High basis risk since stations are often miles
away from insured’s assets (e.g. during
Hurricane Andrew, wind speeds fluctuatedby 40 mph over 10 miles). Stations may failin hurricane conditions.

Swiss Re Coporate Solutions STORMTM
A named windstorm causes wind speeds at
the insured’s assets, exceeding a certain windspeed. Our solutions minimizes basis risk byusing site-specific wind speed, based onreliable data. STORM captures every named
storm, regardless of distance from your site or
equipment failure.

3 Swiss Re Corporate Solutions STORM – A parametric data-based insurance solution

Questions?
Please contact the Innovative Risk Solutions team
Robert Nusslein

Youssef Abdul Baki

Dianna Nelson

Head Innovative Risk Solutions NA+1 212 317 5427
Robert_Nusslein@swissre.com

Structurer North America+1 647 777 5787
Youssef_Baki@swissre.com

Structurer North America+1 914 828 8263
Dianna_Nelson@swissre.com

Todd Cheema

Jiayi Deng

Megan Linkin

Senior Structurer North America+1 212 317 5395
Todd_Cheema@swissre.com

Structurer North America+1 212 407 7359
Jiayi_Deng@swissre.com

Senior Parametric Nat Cat Structurer
North America+1 914 828 4235
Megan_Linkin@swissre.comRMS invests substantial time and financial resources in developing its proprietary applications, models and data. Information concerning RMS applications, models and data is protectedunder trade secret laws, among other intellectual property rights. Recipients of the information contained herein must keep it strictly confidential and must not disclose this information
to any third party. This information, including the content, is provided on an “as is” basis. RMS disclaims all warranties of any kind, expressed or implied, with respect to this informationand the content, including but not limited to any implied warranties of merchantability, fitness for a particular purpose, title, and non-infringement. RMS assumes no responsibility andshall have to liability of any kind arising from the supply or use of this document or the material contained herein. Swiss Re Corporate Solutions offers innovative, high-quality insurance
capacity to mid-sized and large multinational corporations across the globe. Our offerings range from standard risk transfer covers and multi-line programmes, to highly customised
solutions tailored to the needs of our clients. Swiss Re Corporate Solutions serves customers from over 50 offices worldwide and is backed by the financial strength of the Swiss Re
Group. For more information about Swiss Re Corporate Solutions, please visit www.swissre.com/corporatesolutions or follow us on Twitter @SwissRe_CS.
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