Zurich North America, a division of the global insurance and reinsurance firm Zurich, has launched a new product to provide insurance protection for weather related non-physical impacts to the construction industry in the United States.
The parametric insurance product is designed to fill gaps in traditional builders insurance policies, where physical damage from weather loss events is required to make a claim.
With severe weather frequency seen to be increasing, Zurich says that the risk of construction industry delays not being covered by traditional insurance is growing.
As a response, the giant insurer has turned to parametric triggers, providing a further acknowledgement that parametric protection can be designed to be responsive to delay and interruption type risks, where traditional policies often fail to respond.
As a result, Zurich’s Construction Weather Parametric policy doesn’t require any physical loss or damage from a weather event for a claim to be paid to the policyholder.
Instead, claim payments will be based on the occurrence of predefined weather events in the location of a construction project.
Weather perils such as extreme rain, wind and temperatures (hot or cold) can all be covered, with all potentially responsible for project delays, causing severe financial losses, even when the project itself doesn’t sustain any physical impacts.
“We are proud to offer this solution as a complement to our newly enhanced suite of Master Builders Risk and Project Builders Risk policy forms, which include flexible reporting options, as well as several new coverage enhancements attuned to today’s evolving marketplace,” explained Kelly Kinzer, Head of Construction Property for Zurich North America.
“These innovative products demonstrate why Zurich has been a trusted leader in the construction space for 25 years. The Zurich Construction team is committed to putting our extensive knowledge, experience and financial strength to work for contractors and owners.”
The parametric coverage provided by Zurich’s policy can be tailored by the buyer, to enable the parametric product to optimise the response of any payout to suit different pressures construction industry players can face due to weather, from simple revenue losses, to more complex penalties based contracts and expense inflation.
Perils, thresholds, policy limit, deductible and coverage duration can all be individually customised to meet the needs of the risk transfer buyer, Zurich said.
Threshold options for each weather peril are based on historical weather data at the location of the project and policyholders can be covered for one or more weather perils, with duration tailored to fit the peak season for a particular weather risk and pegged to milestones in the construction schedule as well, if desired.
As parametric risk transfer evolves, in line with technology and modelling improvements, it is increasingly going to be tailored based on the actual revenue profile of risk transfer buyers and their projects. So providing coverage that dovetails more neatly into the buyers overall financial profile and that responds more readily when they really need the contingent financial protection and liquidity a payout offers.
As with any parametric risk transfer, insurance or reinsurance product, Zurich explained that payouts are designed to be swift and simple.
“Coverage responds as long as the trigger event occurs, the project is impacted within the agreed-upon dates, and the deductible has been met,” the insurer said.