1. A Study on Growing Popularity of Parametric Aviation Insurance Policies in the Global Aviation Market.
- Author
-
Bhatia, Neha
- Subjects
AVIATION insurance ,INSURANCE ,BUSINESS income insurance ,INSURANCE policies ,AVIATION policy - Abstract
The aviation industry faces an array of risks threatening flight operations and revenue streams, from adverse weather to infrastructure failures and pandemic disease. Traditional indemnity insurance compensates policyholders' assessed losses after claims adjustment, but delays payment. Parametric policies instead pay predefined sums automatically triggered by measurable event parameters, enabling timely claims settlement. Although a niche market, parametric aviation insurance is gaining appeal for providing rapid payouts and expanding insurers' underwriting capacity. This study reviews parametric policy structures, analyzes adoption drivers including data proliferation and financial volatility, examines market barriers, and presents implications for aviation stakeholders. Offering insureds defined, transparent triggers and accelerated claims payment, parametric products can strengthen airlines' financial resilience after disruptions. But education on suitable policy design and accessing reinsurance and alternative capital is still required to drive continued parametric market expansion. [ABSTRACT FROM AUTHOR]
- Published
- 2024