Traditional Home Insurance Is Collapsing. Here’s What Could Fill the Gap

Before the 2019 Mississippi River flood, Wellenkamp discovered parametric insurance, a novel form of coverage expanding globally in disaster-prone areas. Unlike traditional insurance, it insures entire towns and ecosystems, using sensors, satellites, and AI to trigger payouts when specific weather parameters are met. This model, which began in Africa, eliminates the need for human adjusters and speeds up claim processing. Wellenkamp’s nonprofit was introduced to this concept by the UN, leading to discussions with Munich Re to apply it in the Mississippi River basin. As climate change challenges traditional insurance, parametric insurance is gaining traction in North America, with cities like Fremont and organizations in New York adopting it for flood and wildfire coverage. It has also been used to protect coral reefs in Hawaii and Cancun. QUESTION: How might the adoption of parametric insurance change the way communities prepare for and respond to natural disasters?