Insurance is a millennial practice for transferring or distributing risk, to protect from financial loss. As an Earth Observation (EO) market, Insurance is traditionally a small one, but an emerging approach called parametric insurance recently opens new opportunities for EO service providers. If traditional insurance products indemnify for an actual loss sustained, parametric insurance contracts offer a means to guarantee direct payout after a qualifying event. Parametric contract can protect against unpredictable but potentially devastating risks which can be even impossible to get insured for with a classic approach. Parametric insurance is developing, makes up around 15% of issued catastrophe bonds in a $100 billion market.

Any insurable risk, measurable via data, can be indexed and transferred to the insurance markets, via a parametric contract. By using advanced statistical models, data is processed to provide insights, required to quantify and underwrite these risks. The increase of EO acquisition capabilities, with new constellations, small sats, drones and non EO data (in-situ, social network, mobile…) unlock the possibility to get key parameters for insurance companies e.g. soil moisture, vegetation growth, burnt pixels, wind velocity, rainfall, hail, solar radiation or temperature, to be used for numerous markets for instance:

  • Agriculture: since 2018, 12 million farmers are already insured through weather-index schemes.
  • Natural catastrophes (NatCat): Number and intensity of NatCat increased over the last few years generating damage to physical asset (real estate or industrial assets) but also pure financial losses.
  • Maritime: extended drought or lack of precipitation can avoid the use of a channel when the water level is below a specific threshold. Sea state, currents or adverse weather can also cause delays or increase in operational costs such as fuel consumption.
  • Construction: onshore and offshore adverse weather can cause delays and increase in operational costs without suffering any physical damage traditionally insured by insurance.
  • Tourism disruption: natural disasters, adverse weather can cause loss of attraction or severe disruption affecting hotels occupancy rates.

When thresholds are reached, insurance pay-outs are fast and guaranteed, entirely generated by data. The insurance process becomes fully transparent and highly scalable.

If some Insurance companies have developed internal processing capabilities, the delivery of consistent and qualified layers of information at global scale opens new opportunities for data providers and EO added value service providers to develop business partnerships with insurance companies. Furthermore, parametric insurance contract can be integrated in the value offer delivered by the EO service provider, enriching the benefit for the customer, not interfering in the relation between the EO service provider and its customer. Thanks to solutions such as INSDEX® developed by the parametric insurance company Skyline, risks can be indexed and insured in a fully automated manner.

This article was prepared thanks to a contribution of Skyline Partners.


Skyline Partners is a British Insurtech company that specializes in index insurance. Skyline has already designed innovative protections for natural disasters, agriculture, marine, and renewable energy and can help Earth Observation companies generate both new revenue stream and differentiated value. If your company is interested to partner with Skyline, please feel free to contact via