Traditional Home Insurance Is Collapsing. Here’s What Could Fill the Gap (opens original article in a new tab)

A new AI-assisted parametric insurance model is gaining traction in disaster-prone areas, offering faster payouts than traditional insurance but facing criticism over its effectiveness and fairness.

• Parametric insurance uses AI and sensors to provide quick payouts for disasters based on predefined parameters like rainfall or wind speed.
• This model is expanding in disaster-prone areas, including the Mississippi River basin, as traditional insurance struggles with climate change impacts.
• Critics argue that parametric insurance may not always align with actual damage and could favor insurers over affected communities.
• Some cities and organizations are adopting parametric plans to address immediate needs after disasters, such as flood or wildfire insurance.