( like the strength of a storm or the height of a flood ). There is no guarantee that parametric insurance will cover an insured for the actual value of their loss – rather it just pays out an arbitrary sum . However , proponents of parametrics will point out that the cost to insurers is lower , meaning customers will enjoy cheaper premiums .
One good example of parametrics in action is Jumpstart Insurance , a San Francisco Bay Area-based company that offers cover against earthquakes . Its parametric payouts cover residential customers for either US $ 10,000 or
US $ 20,000 , with commercial cover up to US $ 50,000 . The company points out that these payouts rarely scratch the surface of the repairs needed . However , it allows homeowners and business customers to get back on their feet quickly after a quake , hence the name Jumpstart .
Parametric insurers can use connected devices to monitor nat cats – for example , a seismometer in the home – or they can take satellite data from meteorological agencies after the event . The claims process is much quicker , with Jumpstart predicting that some claims are settled within a day .
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