Braedyn Thacker
Research Mentor: Oday Salim
Mentor Department: Environmental Law & Sustainability Clinic, Law
Author(s): Oday Salim, Braedyn Thacker
Session: Session 6 (3:00 PM – 3:50 PM)
Presentation Type: Poster 71
Abstract
As climate change intensifies natural disasters, traditional indemnity-based insurance models struggle to keep up. These models rely on lengthy loss adjustment processes, which typically delay payouts when they are needed most. For all populations, especially in less economically developed countries, these delays in financial relief can lead to long-term economic instability. This research evaluates parametric insurance, which settles claims based on objective, predefined environmental triggers rather than subjective damage assessments. By focusing on urban flooding in areas with high concrete density, this project observes how specific thresholds can trigger automatic payouts. This research analyzes various sources, including policy language, court cases, newspaper articles, government insurance regulations, scholarly journals, and global case studies. These sources emphasize the advantages of parametric insurance by highlighting how it uses independent data to eliminate subjectivity and conflicts of interest found in traditional insurance models. The adaptability of parametric insurance ensures that payouts are fair and tailored specifically to the climate risks of a given area. Ultimately, parametric insurance provides quick payouts by using third-party data to confirm that an event meets a predetermined threshold. The predictability of parametric payouts provides policyholders with the financial certainty they need to prioritize immediate recovery and well-being over short-term economic survival. While parametric insurance is not as well-known as traditional insurance models, this research helps explain how it works and why it is more reliable for people, especially those in flood zones. Parametric insurance will become increasingly essential in the coming years as our environment continues to grapple with the impacts of climate change.
