At Artemis’ ILS NYC 2025 conference, to reshape risk transfer markets.As climate volatility intensifies and capital markets look for transparent, uncorrelated opportunities, parametric ILS is drawing increased attention, not just for peak natural catastrophe risks, but for a much broader array of exposures.Moderated by Martin Malinow, CEO of Parameter Climate, the session titled brought together Sandra DeSilva President & CEO, Mythen Re Ltd.; Tanguy Touffut, CEO, Descartes Underwriting; Urs Ramseier, Executive Chairman & CIO, Twelve Securis; and Sandeep Ramachandran, Portfolio Manager, Pier61 Partners.Ramachandran opened the discussion by pushing back on the narrow definition of parametric products often associated with traditional “cat-in-a-box” structures.

“The thing that really strikes me every time is when you talk to different people about what a parametric is, you never get the same answer,” he explained.“Everyone has a different opinion on what a parametric product is.Most people here would given the insurance and property cat nature of the risk that we’re involved in would think as Martin referenced earlier, a parametric product is perhaps a cat in a box or a cat in a circle where you have a hurricane with various payouts at different intensities, or perhaps an earthquake structure.

And while those all do fall under the category I think it’s just too narrow a focus when you really think about what a parametric product is.“So when I take a step back, I mean, anything that has an observable and independently verifiable index can effectively be a parametric product.” .Malinow echoed that broader framing, adding, “A really great way to think about parametric products is there is an underlying index that needs to be meaningful to the buyer.

It needs to proxy something and there’s an overlying financial structure that those are the financial terms and and there’s seven or eight parameters that sort of make up a contract that need to be spelled out in every contract.” Moving forward, Touffut pointed to technological advances as a key driver behind the surge in demand for parametric solutions.“We see a big uptake in terms of parametric products, and it’s mainly linked to new technologies,” he explained.Adding: “So typically we have more and more data sources from satellite imagery, from radars, from solars that we can use through AI, or I would say innovative algorithms to be able to get rid of the basis risk.

“For instance if we look at wildfire through satellite imagery you can have a very clear understanding if it’s burnt or not burnt, and you don’t need to send loss adjusters on the ground to assess the damage and the technologies are getting better and better, and so the scope of parametric insurance is growing as fast as the tech industry is growing.” For DeSilva, the opportunity lies not only in new perils but also in new markets.Parametric solutions, she said, are moving beyond large clients and into commercial, retail, and high-net-worth segments.“There’s a lot of opportunity now where parametric is going down to more of that retail, commercial, high-net-worth residential space, where there is agriculture, there is businesses that are really affected that can use parametric products as an alternative to identifying new risk,” DeSilva said.

“We are seeing huge spikes now in where insurance is willing to get into the space, take on some more of that risk, and then the reinsurance, and we’re seeing the ILS space playing a big part of that.A lot of the traditional insurers, rated paper, may already be exposed in some of the areas for the nat cat space and so it’s crucial that we have more capacity coming into the market and ILS space is good for that.” From the investor perspective, Ramseier was clear on the benefits parametric structures offer over traditional indemnity deals.“From our perspective, we’re very interested in parametric transactions because it resolves quite a number of problems we have, particularly in private analyst,” Ramseier said.

“So trapped collateral was mentioned, there shouldn’t be any trapped collateral in parametric transactions.Then liquidity is important.So the liquidity is predictable of parametric transactions.

We know after the event there is a quite a fast payout.So we can give higher liquidity to our underlying investors into the fund.” He continued: “So there a lot of advantages of these parametric transactions and I think it’s just a matter of time that more and more of these risks are transferred to the ILS market and I think the ILS space is the natural home for parametric risks because of these advantages.” While still a small portion of the overall ILS market, parametric transactions are poised for significant growth.The panelists agreed that the convergence of climate urgency, technological maturity, and investor demand for efficiency could make parametric ILS a more prominent fixture in portfolios going forward.

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