NU Online News Service
Alabama has made a three-year agreement with Swiss Re in which the insurer will pay the state for wind losses based on documented wind speed in the event of a hurricane.
Similar to a derivative, but called a parametric insurance solution, Swiss Re compensates the buyer based on the physical characteristics of a disaster. The payment can be used for any purpose, including emergency response costs, replacing lost tax revenue and funding of increased insurance costs, Swiss re said.
Swiss Re is providing the insurance cover for the Alabama State Insurance Fund's catastrophic hurricane exposure.
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