Comparison of Parametric Vs Traditional Insurance

Quick Payouts: Simplifies the claims process with fast payouts, eliminating the complexities of lengthy loss adjustment procedures.

Higher Claim Settlement Time: Involves multiple steps like loss intimation, assessment by a loss assessor, and submission of proof of loss, leading to longer settlement times.

No Physical Loss Requirement: Payouts are triggered based on predefined parameters, without the need for physical damage.

Physical Loss Required: Claims are only valid if physical loss or damage occurs.

No Underinsurance Applied: Provides full coverage without concerns about underinsurance.

Underinsurance Applied: Coverage may be reduced if underinsurance is identified.

Covers Unique Risks: Can include events like Loss of Profit (LOP) without Material Damage, and weather risks (e.g., lack of wind, rain, sun) that traditional insurance might not cover.

Limited Coverage: Does not typically cover such specific events, focusing instead on tangible losses.

Flexible Policy Period: Offers customizable policy durations, including monthly, quarterly, half-yearly, or yearly options.

Standard Policy Duration: Generally, policies are issued for a one-year term.

High Structuring Flexibility: Allows for customized products with single or multi-trigger options, tailored to specific needs.

Standardized Products: Offers less flexibility, with standardized product wording and coverage options.