From trigger definition to wire transfer in 72 hours.
Parametric insurance removes every subjective step from the claims cycle. The policy defines an objective threshold. A weather station measures it. When the index crosses the line, money moves.
Every step, documented.
Trigger design
3–10 business days
Our underwriting team works with the insured (and their broker, if applicable) to select a trigger index that correlates with the actual exposure being hedged. For agricultural drought exposure we typically use the Standardized Precipitation Index (SPI) over a 3- or 6-month accumulation window. For wind events we specify a sustained wind speed threshold at a designated anemometer station.
The trigger level, measurement window, primary station, backup station protocol, and payout schedule are all documented in the policy schedule before binding.
Example: SPI-3 ≤ −1.5 measured at NOAA GHCN station ATL-0044, averaged over the 60-day window ending on the trigger assessment date, evaluated monthly.
Continuous monitoring
During policy period
Throughout the policy term Riskwright monitors the designated station's index reading against the contract threshold. The insured receives monthly index reports showing the current reading, trend, and distance from threshold. No action is required from the insured during this phase.
All station data used for trigger assessment is drawn from publicly accessible federal archives — NOAA GHCN, FAA ASOS, and CWOP networks. Index calculations follow published meteorological methodology, and the full calculation is disclosed in the policy schedule.
Trigger confirmation
Within 4 hours of data release
When a trigger assessment date arrives, Riskwright pulls the station data, calculates the index, and compares the result to the contract threshold. If the threshold is crossed, a trigger confirmation notice is sent to the insured and their broker. The confirmation includes the exact index value, the station data used, and the calculation details.
The confirmation is verifiable: the insured can independently run the same calculation using the same public data source. There is no proprietary loss model. The number either crossed the line or it did not.
Automatic payout
≤ 72 hours
Following trigger confirmation, no claim needs to be filed. Payment initiates automatically per the policy contract. A wire transfer to the insured's designated account is completed within 72 hours of trigger confirmation.
Payout structures take two forms. A binary payout pays a fixed amount when the index crosses the attachment point — for example, $200,000 when SPI-3 reaches −1.5. A layered payout scales the payment between an attachment point and an exhaustion point — for example, $100,000 at SPI-3 = −1.5, increasing linearly to $300,000 at SPI-3 = −2.5 (exhaustion). The payout formula — whether binary or layered, attachment level, exhaustion level, and per-unit payment — is fully documented in the policy schedule before binding.
The 72-hour clock is a contractual commitment, not an aspiration. Our payment operations are structured around it, and we don't bind policies where we can't deliver on it.
Basis risk is real. We work to minimize it.
Parametric insurance can pay out when the insured suffers no loss (over-trigger) or fail to pay out when they do (under-trigger). This mismatch between the index and actual exposure is called basis risk. There is also a near-miss scenario: the index ends a measurement period at −1.48 when the trigger threshold is −1.5. The policy does not pay. There is no adjuster discretion, no adjustment for "close enough." The threshold is a contractual term, and the number either crossed it or it didn't.
This is a feature, not a limitation — the same binary clarity that eliminates disputes on trigger events also applies when the threshold isn't crossed. Clients who understand this before binding are better served by the product than clients who expect adjuster-style discretion at near-miss events.
Basis risk cannot be eliminated, but it can be managed. Our trigger design process includes historical correlation analysis between the proposed index and actual yield or revenue data using at least 10 years of station history. We will not bind a policy if the R² correlation falls below 0.65.
Read our basis risk guideStation selection
We select the station closest to the insured's primary exposure area, with documented historical accuracy.
Correlation analysis
Minimum 10-year historical back-test between proposed index and actual loss data before binding.
Backup station protocol
Each policy specifies a backup station and the conditions under which it becomes the reference.
Calibrated thresholds
Trigger levels are set to match the severity at which actual financial distress begins, not arbitrary round numbers.