Sustainability is the order of the day stated Bahaa Abdul Hussein. Governments as well as private organizations are focusing on sustainability for the future. Sustainable development goals (SDGs) have been developed and countries are working to achieve these goals. It is interesting to note that parametric insurance helps in supporting sustainable development goals, we look at this in detail.
Parametric insurance and SDGs
Parametric insurance offers payout for customers based on event triggers. It is popularly used to deal with weather-related events. When an event like a flood or earthquake occurs, it causes huge loss. In parametric insurance whenever a weather-related event occurs, it triggers payout. Unlike traditional insurance, there is no waiting for loss assessment to be done. Payout is done immediately.
This kind of payout is beneficial especially for people who are marginalized and not financially well off. In conventional insurance, they need to wait for an insurance assessor to make a survey. Once the survey is made, the recommendations have to be approved. Payout is made based on the loss assessment. Not only is the time more, but also the amount sanctioned is not certain.
In parametric insurance, payout is made instantly after the event is triggered based on pre-determined values. The insured can thus manage their risks better. They can rebuild and cope up with their losses better. Farmers who can face severe losses due to weather events can get instant payout.
This has been practically implemented in many places. For example, in the Caribbean islands 16 Caribbean countries are covered by parametric insurance. Since the areas is prone to storms and floods, it is very helpful. It helps the people recover from losses quickly. It helps them deal with weather events that are a result of climate change.
The following presents an overview of how parametric insurance supports SDGs:
- Extreme weather conditions occur due to climate change. Parametric insurance can help in dealing with such events by providing succour for those affected. It thus deals with Goal 13 dealing with climate action.
- Parametric insurance ensure payout to all those insured. Whether men or women, anyone affected by any event is secured. This ensures SDG 5 on Gender equality is supported.
- Families affected by events can lose everything. Insurance gives them relief preventing them from going into poverty thus support SDG 1 No poverty. It also supports SDG 2 on zero hunger by providing them security during a disaster.
Parametric insurance is beneficial thanks to its innovative payment system. Through its benefits is contributes to sustainable development goals being achieved. Thank you for your interest in Bahaa Abdul Hussein blogs. For more information, please visit www.bahaaabdulhussein.com.