Mitsui Sumitomo Insurance, a subsidiary of MS&AD Insurance Group Holdings, has announced the launch of its new parametric insurance product, “Weather Insurance Index”, a new offering designed to help insurers manage financial losses caused by severe or unusual weather.
The policy uses an index based on weather data, such as temperature, rain, wind, snow, or sunshine. If the data hits a predetermined threshold, the insurance money is paid out quickly and efficiently, without the need for a physical damage survey.
Mitsui Sumitomo developed this new product in response to the growing financial risks that all industries face due to climate change and unpredictable weather.
Traditional insurance, which requires a detailed investigation to verify and assess losses, can be a slow and difficult process for both the customer and the insurer, the Japanese insurer explained.
-->
“The demand for risk transfer is on the rise. At the same time, traditional insurance keeps facing challenges, such as the difficulty of assessing losses, placing a heavy burden on both customers and insurance companies. The difficulty of providing sufficient compensation, also comes with this approach, with the exception of risks involving property damage covered by fire insurance and other insurance,” Mitsui Sumitomo spokesperson commented.
Adding: “Index insurance’s features, such as ‘prompt payment of claims’ and ‘high transparency in determining liability/non-liability,’ are highly compatible with weather risks and are expected to contribute to eliminating protection gaps. Therefore, we have developed this product to address these challenges.”
Mitsui Sumitomo said that its new solution is part of its commitment to supporting a resilient and sustainable society. The company also noted that sales of its “Weather Insurance Index” will also continue at the new company formed through the merger with Aioi Nissay Dowa Insurance Co., Ltd., which is scheduled for April 2027.
About the Author
