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Comparison of Parametric Vs Traditional Insurance

Comparison of Parametric Vs Traditional Insurance

In today’s rapidly changing world, traditional insurance methods are being challenged by new and innovative solutions. One such innovation is parametric insurance, which offers a modern alternative to traditional indemnity-based insurance.

Parametric Insurance

Traditional Insurance

Quick Payouts: Simplifies the claims process with fast payouts, eliminating the complexities of lengthy loss adjustment procedures.

Higher Claim Settlement Time: Involves multiple steps like loss intimation, assessment by a loss assessor, and submission of proof of loss, leading to longer settlement times.

No Physical Loss Requirement: Payouts are triggered based on predefined parameters, without the need for physical damage.

Physical Loss Required: Claims are only valid if physical loss or damage occurs.

No Underinsurance Applied: Provides full coverage without concerns about underinsurance.

Underinsurance Applied: Coverage may be reduced if underinsurance is identified.

Covers Unique Risks: Can include events like Loss of Profit (LOP) without Material Damage, and weather risks (e.g., lack of wind, rain, sun) that traditional insurance might not cover.

Limited Coverage: Does not typically cover such specific events, focusing instead on tangible losses.

Flexible Policy Period: Offers customizable policy durations, including monthly, quarterly, half-yearly, or yearly options.

Standard Policy Duration: Generally, policies are issued for a one-year term.

High Structuring Flexibility: Allows for customized products with single or multi-trigger options, tailored to specific needs.

Standardized Products: Offers less flexibility, with standardized product wording and coverage options.

For any insurance solutions, please contact Beacon Insurance Broker Pvt Ltd at https://www.beacon.co.in/ 

Insurance is a subject matter of solicitation

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