Parametric insurance pays a pre-agreed amount when a measurable index crosses a stated trigger — not based on indemnity. Carriers, MGAs, and TPAs writing parametric need a platform that ingests oracle data and pays claims on a deterministic schedule.
Parametric insurance pays a pre-agreed amount when a measurable index — wind speed at a defined location, earthquake magnitude, rainfall in a defined window, temperature degree-days, river-gauge level, hurricane category-by-track — crosses a stated trigger. It is not indemnity insurance: the payout is based on the index, not on the insured's actual loss.
This page is a line-of-business reference for parametric carriers, MGAs, TPAs, and program administrators evaluating a policy administration platform that can ingest oracle data and execute fast-pay claims on a deterministic schedule.
A parametric policy specifies an index (e.g., 1-minute sustained wind at NOAA station X), a trigger (e.g., 96 mph), and a payout schedule (e.g., $0 below 96, $5M at 96-110, $10M above 110). When the index crosses the trigger as reported by the agreed oracle, the policy pays the scheduled amount.
The platform has to model the index, the trigger, and the payout function as configurable product attributes — and execute the payout deterministically when the oracle reports.
The oracle is the agreed third-party data source — NOAA, USGS, Swiss Re's verisk-cat-index, a satellite-rain provider, a parametric-cat platform — whose reading determines payout. Carriers and reinsurers require an oracle that is independent and contractually defined.
Mercury's API-first architecture supports configurable oracle integrations, signed data ingestion, and deterministic claim triggers driven by oracle reads through the policy lifecycle.
The single biggest risk in parametric is basis risk: the index may pay when the insured had no loss, or fail to pay when the insured had a major loss. Disclosing basis risk to insureds, regulators, and reinsurers is a product-design and underwriting requirement.
Mercury supports configurable disclosure documentation, signed-acknowledgment workflows, and reporting on basis-risk metrics through the underwriting and bind workflows.
The selling point of parametric is speed: when the oracle reports a triggering event, the policy pays in days rather than months. There is no adjuster site visit, no scope, no negotiation — just oracle, payout schedule, payment.
Mercury's claims administration supports deterministic-trigger claim creation, configurable payment workflows, integrated digital payments through the partner ecosystem, and full audit trail on the oracle read that triggered each payment.
Does Mercury support parametric products with deterministic oracle triggers?
Yes. Mercury's API-first architecture supports configurable oracle integrations and deterministic claim creation when an oracle read crosses a configured trigger.
Can Mercury model multi-tier parametric payout schedules?
Yes. Mercury's product configuration supports tiered, step-function, and continuous payout schedules driven by index reads, with field-level validation through the policy lifecycle.
Does Mercury support fast-pay claims with integrated digital payments?
Yes. Mercury's claims administration supports configurable fast-pay workflows and integrated digital payments through the partner-and-integrations ecosystem.
