Insurance and reinsurance broking firm Aon has structured and placed the first and largest parametric forest fire insurance policy ever undertaken in Brazil, developed for stationery manufacturer Faber-Castell.This solution reinforces Aon’s expertise in innovation within climate risk management and further broadens access to capital, the company said in an announcement.In 2024, natural disaster events in Brazil caused over US$12 billion in losses, according to Aon’s Climate and Catastrophe Insight report, with forest fires alone generating US$180 million in estimated economic losses.According to data from the National Institute for Space Research (INPE), Brazil recorded 278,229 fire outbreaks in 2024, which marked the highest number since 2010.

These outbreaks directly impacted sectors such as agribusiness, paper and pulp, and carbon credit projects, which had their revenues and ESG targets compromised.Moreover, forest fires and extended periods of drought are no longer just environmental hazards, they now exert direct financial consequences that can disrupt operations, strain cash flow, ultimately affecting commitments to investors and clients.Despite this, the Brazilian insurance market still offers limited alternatives, restricted to commercial forests, with low coverage capacity.

However, according to Aon, it was to address this gap that the broker chose to structure stationary manufacturer Faber-Castell’s parametric forest fire insurance policy.Unlike traditional insurance, where settlement can take up to five months, the parametric solution is based on satellite data and objective climate parameters, which allows for quick and transparent claims.Payments are made within 30 days of an event, ensuring immediate liquidity and operational continuity.

Beatriz Protásio, CEO of Reinsurance for Brazil at Aon, commented: “At Aon, we believe that innovation means creating alternative paths in the face of increasingly volatile scenarios.Structuring the first parametric insurance policy against forest fires in Brazil is a milestone for the sector and reinforces our commitment to delivering data-driven and analytical solutions that protect our clients’ businesses.” Alexandre Jardim, head of Commercial Risk Solutions for Brazil at Aon, said: “This initiative with Faber-Castell shows how we can anticipate trends and connect our clients to solutions that go beyond the traditional ones.By combining technical expertise and innovation, we deliver not only additional coverage, but also financial and operational resilience to face the effects of climate change.” Kátia Guarascio, Insurance Specialist at Faber-Castell, added: “Our challenge was to find a solution that overcame the limitations of the traditional insurance model.

With parametric insurance, we were able to significantly expand our coverage capacity and ensure quick payment in the event of a claim, an essential factor for the continuity of our operations.This collaboration represents an important advance in the management of Faber-Castell’s climate risks and reinforces our long-term vision regarding the sustainability of our business.”.All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.

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