CHILE
Exploring parametric insurance: covering earthquake disasters
BNP Paribas Cardif is exploring the possibility of advancing earthquake insurance in Chile with a pioneering parametric insurance model. This fully automated solution, which is still in the prototype stage, aims to streamline the claims process, setting a new benchmark for disaster coverage. Unlike conventional insurance policies that require lengthy loss assessments, this coverage would be triggered by pre-defined seismic intensity thresholds, ensuring instant compensation when an earthquake meets or exceeds the agreed criteria.
A data-driven model for seamless protection
This initiative aims at simplifying the claims process as claims would then be triggered using real-time seismological data. For example, if an earthquake were to surpass a magnitude 7 threshold within a 100 km (62 mile) radius of the insured property, the compensation process could be activated automatically, eliminating the need for a claim submission. The pre-calculated payout would be based on the earthquake’s intensity at the insured location, guaranteeing a transparent, frictionless experience for policyholders.
Beyond customer benefits, automation could significantly reduce operational costs for distribution partners and insurers. By eliminating manual claims processing, it would not only enhance efficiency, but minimize fraud risks and accelerate payouts. This proactive approach could ensure predictability and transparency, thus reinforcing customers’ trust, as policyholders would know exactly under what conditions they are entitled to compensation.
Making insurance more accessible and inclusive
Over a million uninsured homes in Chile do not meet traditional structural insurance requirements. BNP Paribas Cardif’s parametric insurance aims to bridge this protection gap in the future, providing a financial safety for communities. With low monthly premiums and instant payouts, the solution would remove the complexity of traditional insurance, making earthquake protection accessible to a wider audience.
“At BNP Paribas Cardif in Chile, we seek to make insurance not only more accessible, but also more valuable. Considering that Chile is one of the most seismic countries in the world, the Products team is currently working on the development of this initiative, whose objective is to deliver fast and transparent solutions to our customers at the time they need us most.”