Senate bill would authorize state to pursue parametric insurance for disasters

Senate Bill 95, presented by Sen. Ellis, would authorize the state to pursue parametric insurance products that pay on objectively measurable triggers (for example, wind speed or rainfall thresholds) to speed disaster payouts and reduce reliance on ad hoc federal assistance. Ellis told the committee parametric policies have paid out quickly in other jurisdictions and could reduce pressure on the state operating budget after major events.

Ellis cited an international example in which a parametric policy triggered a $150 million payout within days after a hurricane; he said other states and countries use the product to fill gaps in traditional coverage. He asked the committee to authorize the state to pursue such coverage and to work with the Maryland Insurance Administration (MIA) on regulatory details.

Opponents, including an industry representative for property‑casualty insurers, said parametric insurance is available now on the surplus lines market and urged the committee to require a study or a MIA work group before authorizing a statutorily established program. The trade witness said New York is the only state with a specific statutory framework for parametric insurance and cautioned that the bill as drafted establishes a program without a pilot or detailed regulatory guardrails.

Committee members asked for examples of U.S. states using parametric insurance and requested additional information from the sponsor; Ellis agreed to supply a list. No committee vote was recorded at the hearing.