Aon, Swiss Re, and Floodbase reveal parametric insurance solution to mitigate hurricane storm surge losses

Aon plc, a professional services firm specialising in risk management, insurance, and reinsurance brokerage, has introduced a new parametric insurance solution aimed at reducing financial losses caused by hurricane-related storm surges along the US coastline.

This initiative, developed in partnership with Floodbase, a specialist in parametric flood risk, and Swiss Re Corporate Solutions, a global commercial insurer, seeks to address gaps in traditional insurance policies, which often include high deductibles or exclusions for storm surge damage.

According to Aon’s 2025 Climate and Catastrophe Insight report, Hurricane Helene was the most destructive natural disaster of 2024, generating approximately $75 billion in economic losses, primarily due to inland and coastal flooding in the US.

Insurers faced around $37.5 billion in claims from Hurricanes Helene and Milton, including payouts from the National Flood Insurance Program. In some cases, storm surge damage can contribute to more than a third of the total cost of hurricane-related losses.

This newly developed parametric insurance product utilises a range of meteorological data sources to assess hurricane-driven storm surge inundation. Unlike traditional indemnity insurance, which ties payouts to assessed physical damage, the parametric model determines payouts based on water levels.

Policyholders can select a predetermined payout amount for specific storm surge thresholds, with pricing calculated accordingly. This approach allows for greater flexibility in addressing financial losses, covering a broader range of impacts beyond physical property damage.

Storm surges, which result from intense tropical cyclone activity, have been responsible for significant destruction in recent years. For instance, Hurricane Helene in 2024 generated surges exceeding 15 feet when it struck Florida’s Big Bend coastal region, similar to the devastation caused by Hurricane Ian in 2022.

This parametric insurance solution aims to provide a more responsive and efficient financial safety net for businesses and communities facing the increasing risks associated with extreme weather events.

Cole Mayer, Head of Parametric Solutions at Aon, said: “Our data shows that storm surge can be a significant driver of losses for corporates, public entities and re/insurers alike, so we developed this collaborative parametric solution to help bolster existing levels of cover.

“The solution can function either as a standalone product or in conjunction with traditional and non-traditional insurance policies, to ensure that clients can secure comprehensive protection for their US storm surge exposures. It is part of a suite of Aon product offerings that together are helping to shape better decisions and more comprehensive sources of liquidity for clients.”

Martin Hotz, Head Parametric Natural Catastrophe at Swiss Re Corporate Solutions, added: “Parametric insurance provides a fast, flexible and transparent way to cover financial losses caused by natural catastrophes. A substantial part of hurricane-related losses can be the result of storm surge, and with this innovative solution we can better assist corporations in exposed areas with a rapidly-paying cover that fits their individual risk management strategies.”

Annbjørg Medhaug, Chief Product and Strategy Officer at Floodbase, added: “The economic losses in the wake of major hurricanes are staggering. The inherent flexibility of this parametric storm surge product provides US coastal corporations with a much-needed solution to address their specific protection gaps.

“Floodbase is delighted to have collaborated with Aon and Swiss Re Corporate Solutions to develop this solution, which demonstrates our continuous commitment to uniting technology and risk capital in order to bring more comprehensive protection to cedents.”

This website states: The content on this site is sourced from the internet. If there is any infringement, please contact us and we will handle it promptly.