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USIC Launches Parametric Microinsurance for Hurricanes, Earthquakes

By on July 8, 2021

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Puerto Rican Insurer Offers Emergency Cash Option Product

SAN JUAN — Puerto Rico insurer United Surety & Indemnity Co. (USIC) has launched its Parametric Microinsurance products for hurricanes and earthquakes to provide homeowners and tenants with emergency cash once their policy is activated if such events occur. 

Parametric microinsurance is a policy that covers the probability that a predetermined event occurs and pays the insurer once the parameters defined by the policy are activated. Different from a traditional policy, the parametric microinsurance does not require physical damages to the property and the policyholder receives compensation without adjustment or a deductible.

“As an insurance agency, we recognize the difficulties to afford unforeseen spending after a hurricane or an earthquake. Therefore, we have introduced in both products the alternative to obtain emergency cash to cover immediate needs or the expenses that arise after such emergencies” said Rafael Blanes, USIC vice president and chief risk officer.

In case of a hurricane, this microinsurance uses a property’s location to determine whether coverage is active when the path of the eye of a category 3 hurricane is within 50 miles or less from the property. Based on the information published by the National Hurricane Center (NHC), the payment to be received is calculated depending on the distance from the eye of the hurricane, the location of the property, and the maximum speed of the sustained winds. 

“After the hurricane, we will pay the insured from $200 up to $4,000, depending on the alternative the client chooses and the parameters activated,” Blanes explained. “The applicable parameters vary according to the insurance type, but are always specific, and measured with public and accessible information, from reliable sources such as the National Hurricane Center (NHC) and the United States Geological Survey (USGS).”

As for the earthquake parametric insurance, it uses the location of the property to determine if the coverage is activated if a 6.5-magnitude earthquake or greater is registered on the Mercalli intensity scale. The determination to activate the policy is calculated according to the data provided by the USGS. The payment will be from $3,750 up to a maximum of $30,000 depending on the alternative chosen by the client and the applicable parameters. 

The hurricane parametric microinsurance has annual premiums starting at $125, and the earthquake parametric microinsurance premiums start from $115 annually. 

“Both products have competitive advantages and benefits for the clients that apply to the entire property regardless of location or construction type; property damages do not need to occur, and the insured receives their money without evaluation or damage inspections, adjustments or deductibles. Also, there are no restrictions for the use of the cash,” said Frederick Millán, USIC’s president. “These products are an easy, convenient and economic solution to have secure access to emergency cash when it is most needed. For more than 30 years, USIC has stood out for innovating and developing unique products to satisfy our clients’ needs, and is the only Puerto Rican insurance company rated A Excellent by AM Best for our financial strength.”

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