Today, we live in a digital age, with access to large amounts of data on virtually anything, anywhere. Through satellite images, for example, we have access to vast climate and vegetation data worldwide. Through connected objects, we are gathering statistics and trends in real-time. What does this data offer to insurers and their customers? Interestingly, thanks to today’s sophisticated data processing methods, in the end, any exposure that can be measured, can be insured.
AXA Global Parametrics’ aim is to provide its customers with a seamless experience through a “parametric” approach. The method is very simple: based on an independent parameter that is correlated to the client’s losses, the insurance product is built and claims payments are triggered automatically if an agreed-upon threshold is reached.
For example, say a wind farm wishes for a cover against lack of wind causing a decrease in energy production - in case of a wind speed deviation of 10% below the 5-year average, for example, the payment is made automatically.
The possibilities are endless: once both parties agree on a reference parameter, we can imagine automatic covers when any type of unusual event occurs. A farmer’s yield can be insured, for example, as can a passenger’s transportation delay.
AXA already offers parametric insurance in 28 countries across the globe, covering diverse risks for numerous industries, mainly focused on large corporations and the public sector. For example, AXA covers solar panel farms in China against lack of sun causing a decrease in energy production. Additionally, in Ethiopia, AXA protects several tens of thousands of farmers against drought risks.
AXA Global Parametrics: a new entity expanding to SMEs and individuals
Through this dedicated subsidiary that acts as the AXA Group’s center of excellence and that is already recognized for its expertise and innovative insurance products, AXA Global Parametrics hopes to cover more risks, and more clients, worldwide.
With the launch of AXA Global Parametrics, our aim is to keep working with large corporations and the public sector but also broaden our horizons with SMEs and individuals. Through sophisticated technology and access to new data, we will also develop new parametric solutions that go beyond weather risk.