Swiss Re created the first parametric insurance policy against extreme heat for a public entity in the United States, aimed at a city in the state of Arizona. The solution was reported by the newspaper The Insurer and complements the city's heat response plan.
The policy is triggered when the 10-day moving average temperature exceeds 39 degrees Celsius at the local airport. The parametric trigger uses the daily average of both the maximum and minimum temperatures, which, according to Marilyn Blattner-Hoyle, head of public sector solutions at Swiss Re, connects to the importance of nighttime heat.
The payments are intended for situations that require a rapid response, and can finance measures such as spray cooling systems, cooling rooms, hydration support, and assistance to vulnerable populations. Blattner-Hoyle emphasized that these measures have a cost and that, when heat and heat waves continue for extreme periods, cities need to act.
The specialist emphasized that insurance should complement, not replace, heat adaptation measures, such as creating green and shaded areas or installing reflective roofs. "Adaptation comes first," she stated, adding that insurance covers the residual risk, and that the combination of adaptation and risk transfer through insurance can strengthen the financial resilience of cities against the effects of extreme heat.
