November 2019 - Liberty’s new parametric product helps Australian businesses insure against unexpected extreme weather conditions
Liberty Specialty Markets has launched a new insurance product that allows Australian businesses to insure against unexpected extreme weather conditions.
Liberty’s Weather Index product helps to protect businesses from variations in weather conditions, including rainfall, temperature, evaporation, wind speed, wind direction, frost, sunshine duration, cloud cover or air pressure.
“With weather patterns becoming less predictable, we know that businesses that rely on certain weather conditions are increasingly nervous about the impact of extreme weather on their operations,” said Michael Lincoln, Vice President Crisis Management Asia Pacific.
“When thinking of weather insurance people often first think of farming crop insurance. Our Weather Index product has much wider application beyond agriculture, and we expect there will be interest from renewable energy producers, construction, mining, food & beverage producers, tourism and retail.”
“There are a wide variety of potential applications,” said Lincoln. “Theme park operators that know that excessive rain deters visitors, solar farms that rely on hours of sunshine, or building construction teams that can’t work in windy conditions. There are many different situations where a business may seek protection from extreme weather conditions.”
Liberty’s Weather Index product is a parametric product that covers the insured for the probability of a pre-defined event happening. It relies on data captured by the Australian Bureau of Meteorology to determine the parameters underpinning the contract.
A client can nominate a strike price for their desired risk, and a payout schedule on a sliding scale can be put in place to provide payment should the cover be triggered. The more extreme the variation, the higher the payout rate will be.
“With the policy indexed to clearly defined triggers, it makes it very straightforward to assess claims. I think this makes it appealing for businesses as they know that if the conditions they are insuring against do eventuate they will receive payment quickly and without time-consuming negotiation,” said Lincoln.
Liberty Specialty Markets already distributes and underwrites this product in Europe and has now expanded the offering into the Australian market.
For more information please contact our underwriters:
Vice President Crisis Management
+61 2 8298 5958
Underwriter, Crisis Management
+61 7 3235 8808