Parametric solutions are becoming more and more seen as a practical and efficient substitute for more conventional forms of catastrophe protection, as the insurance industry works to better understand how elements like extreme weather, climate change, and other natural peril catastrophes impact communities worldwide.

Large corporations with captives, Lloyd's syndicates, and insurance-linked securities (ILS) funds are just a few of the clients that the partnership between Moody's RMS and Augment Risk will assist in serving. These clients are all considering the various advantages that parametric reinsurance solutions may provide. The partnership will concentrate on a variety of threats, such as strong convective storms, windstorms, earthquakes, and wildfires.

"We believe parametric risk transfer products will play an increasingly important role in risk management," stated Ben Brookes, Managing Director of Moody's RMS. The advantages of thorough risk disclosure and great transparency are combined with the possibility of quick loss settlement in parametric risk transfer. As enablers, we anticipate that the usage of sophisticated risk models and base risk analytics will increase, leading to further significant market expansion.

Kurt Cripps, Global Head of Parametric at Augment Risk, elaborated, "Collaborating with Moody’s RMS will grant our clients access to some of the world's most advanced risk analytics capabilities. This partnership will also involve the development of modeling tailored specifically for parametric reinsurance protections. For index-based solutions to expand as an asset class, the modeling must support a view of risk grounded in empirical and stochastic analysis."

Moreover, proving the product's ability to react to specific threats is essential to gaining carriers' solvency advantages. It is clear that as this emerging market takes shape, buyers and sellers will need complete transparency on the index and the actual and expected losses for each given risk.

With the most recent models that the markets use to help price parametric risk, our partners will be able to make more educated, accurate, efficient, and confident risk management decisions in light of the fact that risk is more widespread and complicated than ever. We can attain more consistent rates and contribute to normalizing this vibrant industry by fully informing our clients. The parametric market has been on the edge of the natural disaster market for far too long. We think that parametric solutions have the potential to seriously disrupt conventional reinsurance purchasing practices at this time.

The partnership between Moody's RMS and Augment Risk will facilitate the delivery of organized and standard risk transfer offerings to the market by allowing placements to be syndicated across several capital providers.

More thorough modeling that takes into account industry loss, empirical data, and stochastic analysis should contribute to increasing confidence in the development of parametric policies as an alternative to traditional products. As this confidence grows, parametric solutions as a business category should draw more investment.

"We are committed to providing bespoke solutions that not only protect our clients but, more importantly, allow them to grow and maximize their enterprise value," Augment Risk CEO Andrew Matson stated. We view this partnership as a significant advancement since investors are looking for modeled results that are more precise and targeted. Augment Risk is thrilled to have parametric solutions as a cornerstone of our execution approach, as one of the few specialized brokers in this market. This partnership is more evidence of our unwavering commitment to creating a distinctive and pertinent reinsurance broker.