Parametric Insurance for Public Sector

Parametric insurance offers payout against a specific event stated Bahaa Abdul Hussein. While this form of insurance is used by the public, it is also important for the public sector. Government and municipalities can make use of parametric insurance. We look at the opportunities for government organizations from parametric insurance.

Importance of parametric insurance for government

Disasters can occur any time. An event like a flood, earthquake, or storm can cause severe losses. While private citizens would suffer losses, so would the government. The government suffers losses in terms of damages to public properties. The government entity also needs to rebuild damaged property. They also have other concerns like:

  • Providing aid to the needy.
  • Ensuring those who are uninsured are able to cope up with damages.
  • Government budget gets severely dented due to the occurrence of disasters and related events.
  • Helping affected local businesses to recover.
  • Ensuring liquidity, so funds can be managed for other needs.

Parametric insurance would be very helpful for the government to manage disasters. When a disaster occurs, the need for funds increases exponentially. It would be beyond the budget of the government to raise money. They would then need to depend on aid and funds from federal government and other agencies.

If parametric insurance is available, then it helps them get valuable funds to deal with their needs. Parametric insurance offers payout based on a particular event occurring. The focus can be on recovering from the disaster rather than computing losses. The rapid payout ensures timely available of money to deal with the disaster.

When a public entity like a municipality has parametric insurance, they get the money needed to rebuild post-disaster. Flexibility of use is a key benefit for public sector. The coverage for parametric insurance is expansive. The insurance can help in protecting assets that are non-traditional and not easy to underwrite (eg: Natural assets).

The focus on data with the use of analytics and the growth of Artificial intelligence has ensured efficient parametric insurance. Public entities can get enhanced risk coverage.


Parametric insurance is an innovative form of insurance that is extremely helpful for public sector organizations. Since this insurance deals with events, it is very helpful in dealing with disasters. It helps public entities cope with the serious challenges that disasters pose. It is important for public entities to seriously consider parametric insurance. Cities/states in disaster prone areas must obtain parametric insurance to help them manage disasters better. The blog has been written by Bahaa Abdul Hussein and has been published by the editorial board of Fintek Diary. For more information, please visit

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