Parametric trigger indices
Indices you can settle on.
Freeze, heat, and rainfall indices calibrated on observed gridded data, designed and validated for parametric structures.
observed index trigger threshold trigger event
The problem
Most basis risk is decided at index design time.
A parametric cover pays on an index, and the index is only as good as the data behind it. Gridded weather records carry station gaps, terrain biases, and version changes. A trigger set on uncorrected data misprices both sides of the contract.
What we build
Indices with a known relationship to ground truth.
The build
- Trigger indices designed on observed gridded records
- Grid bias quantified at the locations that matter, then corrected
- Every correction documented, with a defined settlement source
- A validation record both parties can inspect
- For US crop covers, methodology developed to the 508(h) submission standard
Worked example: a freeze index
- Hours below a crop-damaging threshold, at named grid cells, over a coverage window
- Calibrated against nearby stations
- Trigger frequency reported over the full historical record
- Same construction for heat, rainfall deficit, and excess rainfall
Priced forward
An index settles on observations. Its risk can be priced ahead.
Our calibrated seasonal forecasts express trigger probabilities for the coming season, which supports pricing, portfolio steering, and reinsurance conversations on the same index that settles the contract.
Verification practice
Every index ships with its validation record.
- Grid versus station comparison at every location the index touches
- Historical trigger frequency over the full record
- Sensitivity to threshold choice
- The record is shared before any commitment
Start with an index review.
Send us a peril, a region, and a settlement source you are considering. We will assess the data and show you the validation record we would build.
Or write to info@ilikallc.com