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Experts pitch parametric insurance, freeboard and community-based approaches as complements to traditional flood policies
Summary
At a Jan. 30 forum, parametric insurance specialists and state officials urged Connecticut lawmakers to consider new approaches — including parametric triggers, freeboard requirements and community-based catastrophe insurance — to speed payments and increase community resilience.
At the Jan. 30 Insurance and Real Estate Committee informational forum, experts described parametric insurance and community-based approaches that can deliver faster, more-flexible payments after flood events and can be layered with traditional insurance.
"Before I get into the parametric insurance, I wanted to comment on something that I've heard from several speakers before, and that is, how do you incentivize people to purchase coverage?" said Alex Korp, a parametric-insurance specialist. Korp described parametric products that pay when an external trigger is met (for example, rainfall thresholds recorded at a weather station, river-gauge levels, flood sensors, or satellite-detected inundation) and touted their speed and predictability: "you get paid a pre agreed amount. No questions asked."
Korp and other speakers suggested parametric structures can address liquidity needs and non-damage losses by providing immediate funds to households, businesses or community intermediaries after a triggering event. He cited community-based catastrophe insurance models where a city or nonprofit buys a parametric policy covering multiple zip codes and distributes proceeds to affected households — an approach the panel said New York City recently used.
State and industry participants also discussed mitigation and building standards. DEEP and insurance regulators highlighted mitigation tools such as freeboard (adding an additional foot above a FEMA base flood elevation) and fortified building standards developed by the Institute for Business and Home Safety. "Freeboard adds an additional foot onto the base flood elevation," said Butch Kurnerney. Connecticut officials and industry representatives said mitigation grants and building-code improvements can lower long-term risk and premium pressure.
Ending: Panelists recommended legislative and program options for 2025: improve disclosure to buyers about prior flooding, expand consumer outreach, consider community-based parametric pilots and boost state support for mitigation grants and CRS participation.
