Skyline and Munich Re’s parametric protection for Jamaican farmers triggered by Beryl

Parametric insurance catalyser Skyline Partners and reinsurance giant Munich Re have revealed that a claim triggered by Hurricane Beryl has been paid to the Jamaican Co-operative Credit Union League (JCCUL).

The payment was due under a parametric insurance policy first issued in April 2022, subsequently renewed by Munich Re, which protects farmers by allowing them to take a payment holiday if extreme weather impairs their ability to repay micro-loans.

Hurricane Beryl passed very close to Jamaica on 3 July 2024, however, it did not make landfall. Thus, many event-triggered insurances reportedly did not respond due to the binary nature of their radius, wind speed, and/or minimum pressure triggers.

“In contrast, Skyline Partners’ unique FatTrack™ trigger mechanism, which responds to the dynamic nature of hurricane events, better reflected conditions on the ground. Payout was therefore due under the Howden-brokered coverage,” Skyline Partners said.

In the case of Beryl, 45% of the total JCCUL policy value has been paid. As per Skyline Partners, the amount reflects the lower, yet still significant, damage caused by the storm’s close proximity to Jamaican terra firma.

Skyline’s Co-Founder Laurent Sabatié, commented, “The insurance product responded exactly as intended. The fact that this policy triggered clearly with a partial payment for Beryl in Jamaica is a strong endorsement of FatTrack for everyone involved – the underwriters, the insured lenders, and of course the beneficiaries.

“While those covered under industry loss warranties and loss-index-driven cat bonds must wait to learn if their coverage will kick in, we have already paid our insureds.”

Skyline’s Co-Founder Gethin Jones, added, “The payment should provide confidence to lenders who require borrowers to secure insurances to protect loan-funded assets, but are not yet comfortable with parametric solutions.

“We are proud to support the Jamaican farming community in a time of terrible crisis. For our clients, it shows that parametric insurance need not be a purely pay-or-don’t-pay proposition. When parametric is carefully tailored to the exposures, basis risk can be lower than under conventional policies, and its efficiency is undoubtedly very much higher.”

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