14 December 2020Actuarial & underwriting

Aon extends partnership with CelsiusPro to strengthen parametric offering

Aon has extended its long-term collaboration with parametric technology expert CelsiusPro.

Aon said it had made the move in response to increasing demand for parametric products. Aon’s innovation and solutions team specialises in parametric transactions and has seen a dramatic increase in enquiries about such products. Clients are interested in supplementing or replacing existing risk transfer programmes with parametric structures to potentially improve cashflow following a loss event, Aon explained.

Parametric products can be particularly beneficial when capacity becomes constrained in the traditional re/insurance market, Aon noted. They are supported by a range of capital sources – including both traditional and capital markets capacity – and can be structured to address a wide range of weather events, with US hurricanes being a key area of focus.

Aon and CelsiusPro, which have collaborated since 2012, said they can deliver parametric data within a few hours of a triggering event. Any subsequent claim can generally be paid within 30 days, and sometimes within 48 hours.

Paul Ramiz, director of Aon’s innovations and solutions team, said: “Due to the speed of the payout, parametric solutions offer clients immediate and quantifiable cashflow as opposed to the delayed cash replacement offered by traditional insurance. All parametric products are bespoke, so the client really does receive a solution that reflects their unique blend of risk.”

CelsiusPro data and expertise have been an important component in the risk analysis and design of parametric hurricane insurance products in particular, Aon said. The work has not only included correlation analysis and the design of index-based insurance products, but also settlement services for Aon clients.

Kurt Cripps, managing director of Aon’s innovation and solutions team, said: “As an experienced parametric solutions provider, CelsiusPro is able to access and process extensive volumes of climate and natural catastrophe data, combined with its fully automated processes for risk modelling, pricing, and policy management. Our joint capabilities enable us to innovatively use analysis, placement, structuring and settlement that allows us to deliver tailored solutions to our clients’ needs.”