Peter Settel’s Vision for Parametric Insurance in Small Business
Peter Settel aims to introduce trigger-based parametric insurance into everyday commercial sales, before agents or clients actively seek it out. This innovative approach addresses gaps in traditional business interruption insurance, which often fails to provide coverage for losses that occur without physical damage, such as when a storm causes a power outage at a business.
The Case for Parametric Insurance
Settel, the president and CEO of Bold Penguin, indicates that parametric insurance—defined by predetermined triggers—has been effectively utilized mainly by governments, farmers, and large corporations to mitigate risks from natural disasters and political instability. However, he asserts that the small commercial market presents significant opportunities for this coverage model.
“Parametric has already established itself as really important in larger-scale, society-level issues,” Settel states. He envisions adapting it for smaller businesses, helping to protect them from overlooked risks like power outages.
Challenges in Selling Parametric Insurance
Despite its potential, the primary challenge lies in market awareness. Many small business owners and their agents are unfamiliar with parametric insurance. To overcome this, Settel proposes integrating parametric options into standard commercial quotes rather than positioning them as separate products. Leveraging existing business data allows for a seamless offer without needing additional customer questions.
Innovative Products and Market Growth
Bold Penguin has made strides by introducing Adaptive Insurance’s GridProtect, a parametric policy paying out for verified power outages. Furthermore, the market for parametric insurance is expanding rapidly, with U.S. broker USI predicting growth from $19.4 billion in 2025 to around $63.8 billion by 2035, highlighting a clear need for small business coverage.
The Future of Parametric Insurance
Settel envisions a future where parametric insurance is integrated into a “hybrid protection stack,” where traditional and parametric products work in harmony. This may involve bundling products, implementing overlapping coverage, or providing incentives for customers who use both types of insurance.
Despite inherent challenges, such as basis risk—which occurs when the payout does not align with actual losses—Settel believes that the timely adoption of parametric insurance can be a game changer for small businesses. He emphasizes, “You have to be in the water before the wave crests in order to ride it,” making the case for acting swiftly in this evolving market.
