Benfield Greig Paris and Generali France Assurances have completed one of the first wind index transactions to provide protection via a reinsurance treaty against windstorms in France.
This differs from traditional reinsurance methods. Usually these are based on insuring against the probability of damage occurring - whereas this scheme uses a meteorological index.
Cover is based on a daily calculation of the cumulative maximum wind speeds.
The companies believe this method frees the buyer from the current restraints of the insurance and reinsurance markets, such as wear and tear or duration of loss. They also said it allows the stabilisation of reinsurance prices.
Managing director of Benfield Greig Paris Jean-Yves Nouy explained one of the major benefits: "In creating a product based on wind indexes, we have established a new bridge between the insurance and financial worlds. In effect, the same protection can be placed with financial markets or with reinsurance markets."
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