InsurTech Parametric Insurance Platform — UK ClimaTech Insurer

Parametric trigger

insured event defined as observable weather parameter exceeding/falling below threshold.

Weather data sources

• 1Met Office Weather Datahub API (official UK weather — hourly measurements from Met Office network),
• 2ERA5 reanalysis data (ECMWF — historical climate data for policy underwriting),
• 3Tomorrow.io hyperlocal forecasting (4km resolution — locating weather event to specific field or postcode).

Trigger verification

three-source consensus — Met Office primary, Tomorrow.io secondary, ECMWF tertiary.

Automatic payout

• trigger confirmed → payout instruction created → Stripe payment initiated → customer notified (GOV.UK Notify) within 4 hours of trigger confirmation.
• No claim needed — fully automated.

Basis Risk

the difference between the parametric trigger payout and the actual loss experienced by the policyholder.

FCA ICOBS requirement

basis risk must be disclosed clearly in policy documentation and renewed annually.

Basis risk disclosure

• 1policy document section "Understanding Basis Risk" — plain English explanation of when payout may exceed or fall short of actual loss,
• 2annual basis risk review — historical comparison of trigger payouts vs claimable conventional losses for the portfolio,
• 3basis risk quantification — for agricultural policies: correlation between rainfall deficit and crop yield loss disclosed in policy schedule.

FCA Consumer Duty

parametric insurance must provide fair value — basis risk is a key Consumer Duty consideration.

UK agricultural parametric products

• 1rainfall deficit (below threshold for growing season — crop yield protection),
• 2frost events (days below -2°C in April/May — blossom frost damage),
• 3high wind (sustained winds above 50mph — orchard and polytunnel damage),
• 4excessive rainfall (flooding risk — not covered by parametric — excluded for clarity).

SME parametric

• 1heatwave (above 30°C for 5+ days — hospitality revenue loss),
• 2snow disruption (snow depth above 10cm — retail footfall loss),
• 3drought (SPI below -1.5 — garden centre and irrigation business revenue protection).

Policy schedule

customer selects location (postcode centroid), trigger threshold, payout amount, and period.

Underwriting engine

• historical trigger frequency × payout amount = expected loss × loading = premium.
• Real-

Portfolio risk dashboard

real-time weather monitoring for all active policies → exposure summary (which policies are approaching trigger threshold — amber alert at 80% of trigger), live claims (trigger confirmed → payout in progress), and historical claims (paid triggers, unpaid periods, basis risk analysis).

Reinsurance reporting

• parametric reinsurance (Zurich or Swiss Re) receives daily portfolio risk data (aggregate exposure, trigger proximity).
• MGA (if operating as MGA): capacity provider receives weekly exposure report and monthly bordereau.

Claims audit

every automatic payout has an immutable audit trail (weather data source, trigger threshold, payout amount, payment reference) — FCA ICOBS requires claims to be fair and evidence-based.