Index-based contracts

{
  "id": "MLC-T-INS-001811",
  "term": "Index-based contracts",
  "field": "Insurance and risk management",
  "definition": "Financial agreements where payouts or obligations are directly tied to the value of a specific index, rather than to an actual loss assessment. In insurance, these contracts, often called parametric insurance, trigger payments when a predefined index (e.g., rainfall, wind speed, earthquake magnitude) crosses a certain threshold. They offer rapid payouts and reduce claims adjustment costs.",
  "url": "https://mlchart.com/terminology/insurance/index-based-contracts/"
}