Aon’s Elizabeth Henderson has highlighted a $223 billion climate protection gap, warning that traditional insurance models are often too slow and complex to keep pace with fast-moving climate disasters, particularly in resource-constrained regions, while pointing to parametric insurance as a potential catalyst for transformational change.
“This is where parametric insurance offers the opportunity for a transformational shift. Unlike traditional coverage, parametric insurance pays out automatically when specific conditions are met. This makes it possible for communities to access funds quickly and accelerate the recovery process,” Henderson explained.
Henderson reiterated that parametric solutions are particularly valuable in regions where traditional insurance is scarce.
She noted that in small island nations and agricultural areas, these products have proven highly effective in delivering rapid relief.
Consequently, demand for parametric insurance is accelerating across the Asia-Pacific, Sub-Saharan Africa, and the Caribbean.
“We can’t meet today’s climate risks with yesterday’s tools. As weather-related disasters grow in frequency and intensity, the imperative is clear: we must shift from reactive recovery to proactive resilience,” Henderson added.
She continued, “That means investing in innovative risk transfer models, expanding access to financial protection and strengthening infrastructure before disaster strikes.
“Parametric insurance, catastrophe bonds and public-private partnerships are already helping communities protect what matters most.
“Closing the $223 billion climate protection gap will take foresight, collaboration and bold action. Experts are rethinking traditional systems of risk management, designing more adaptive solutions to meet the future needs of a rapidly changing climate.”
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