Aon has launched a new parametric insurance solution designed to address and mitigate losses from hurricane-related storm surge along the US coast.

Developed in collaboration with Floodbase and Swiss Re Corporate Solutions, the new product is designed to help bridge protection gaps in traditional insurance policies, which may demand high deductibles or include significant exclusions in policy wordings for storm surge risk.

According to Aon’s own data, Hurricane Helene was the single most devastating natural catastrophe event of 2024, estimated to have caused approximately US$75bn in economic loss, mainly due to US inland and coastal flooding.

For insurers, damage from Hurricanes Helene and Milton resulted in approximately US$37.5bn of claims, including pay-outs from public insurance from the National Flood Insurance Program.

For some hurricane events, storm surge damage can account for more than a third of the total loss cost.

Cole Mayer, head of parametric solutions at Aon, said: “Our data shows that storm surge can be a significant driver of losses for corporates, public entities and re/insurers alike, so we developed this collaborative parametric solution to help bolster existing levels of cover. The solution can function either as a standalone product or in conjunction with traditional and non-traditional insurance policies, to ensure that clients can secure comprehensive protection for their US storm surge exposures."

Martin Hotz, head parametric natural catastrophe at Swiss Re Corporate Solutions, added: “Parametric insurance provides a fast, flexible and transparent way to cover financial losses caused by natural catastrophes. A substantial part of hurricane-related losses can be the result of storm surge and with this innovative solution we can better assist corporations in exposed areas with a rapidly-paying cover that fits their individual risk management strategies."

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