Index-based insurance

{
  "id": "MLC-T-INS-001812",
  "term": "Index-based insurance",
  "field": "Insurance and risk management",
  "definition": "A type of insurance, also known as parametric insurance, where payouts are triggered automatically when a predefined index or parameter reaches a certain threshold, rather than based on an assessment of actual losses. This approach is often used for risks where direct loss assessment is difficult or costly, such as natural catastrophes or agricultural risks. It provides rapid claims settlement and reduces moral hazard.",
  "url": "https://mlchart.com/terminology/insurance/index-based-insurance/"
}