Willis introduces parametric insurance policy based on weather forecasts

Willis has announced a new parametric policy that is activated automatically when a red weather warning is issued by the UK Met Office or Met Éireann, The Irish National Meteorological Service.

Red weather warnings are used for the most severe weather which represents high risk to life, damage to property and substantial disruption to travel expected. 

For example, in January 2025, a red weather warning was issued for Storm Éowyn, which ultimately affected large areas of the UK and Ireland. Windspeeds peaked at 114 mph causing significant impacts in terms of damage to property, widespread power outages and severe travel disruption.

As traditional insurance policies typically respond to the physical damage impacts of weather events such as storms and floods, they do not cover the cost of the pre-emptive action taken following the issuance of weather warnings.

Willis’ new parametric policy means that the event triggering coverage is not an actual weather occurrence or its resulting damages, but the weather warning itself.

Claire Wilkinson, managing director, alternative risk transfer solutions at Willis, said: “By triggering the parametric policy on the forecast rather than the event, the insured receives a pre-agreed payout that can cover lost revenue and operational costs due to actions taken in anticipation of weather-related disruption, even if the event does not manifest itself as was forecast.

”The parametric style of the policy provides a transparent basis of cover, rapid claims settlement and complete flexibility in the use of claims proceeds.”

Collaboration

The product has been designed in collaboration with Swiss Re Corporate Solutions, which will act as the insurer.

Nina Arquint, UK and Ireland chief executive at Swiss Re Corporate Solutions, said: “We are very pleased with the launch of this innovative solution for our UK- and Ireland-based clients as extreme weather events are increasingly impacting their businesses.

”I believe this also demonstrates that parametric insurances have established themselves well in the European markets and Swiss Re Corporate Solutions is committed to leveraging its expertise in this space to help close protection gaps.”