As Tower launches a parametric insurance product in Fiji, its chief underwriting officer says the general insurer is considering options to introduce something similar in New Zealand.
On Tuesday, Tower - which provides general insurance to people in New Zealand, Fiji, Tonga, Samoa, American Samoa and the Cook Islands - announced it had launched a new parametric insurance product called Rainfall Response Cover in Fiji.
Parametric insurance is a type of insurance contract that insures a policyholder against the occurrence of a specific event by paying a set amount based on the magnitude of the event, as opposed to the magnitude of the losses as with a traditional indemnity insurance policy.
Tower said the Rainfall Response Cover would provide a cash pay-out, if rainfall meets certain criteria, when a customer is impacted by heavy rainfall regardless of the damage and without needing an insurance assessor’s sign off.
This cover ranges from $1000 to $3000 and premiums range from $80 to $240 depending on the level of cover purchased, Tower said.
“In the event of heavy rainfall, customers can receive payment from Tower via their mobile wallet or bank account,” Tower said.
The insurer is also mulling parametric insurance for New Zealand.
"Tower is considering options to introduce a parametric offering in New Zealand as part of our commitment to product innovation and preparing for a future shaped by climate change," Tower's chief underwriting officer Ron Mudaliar said.
The Rainfall Response Cover is being launched as a pilot for the 2025-2026 wet season and has support from the United Nations Capital Development Fund and the Pacific Insurance and Climate Adaptation Programme. It's in partnership with the Reserve Bank of Fiji under a project called the InsuResilience Solutions Fund, which will provide premium subsidies during the pilot phase.
“Insights from the pilot will inform a nationwide rollout ahead of the 2026-2027 season, with the potential expansion to other Pacific territories where Tower operates,” Tower said.
Members and customers of the Ministry of Women, Children and Social Protection, the Fiji Crop and Livestock Council and the Pacific Disability Forum will be able to access this cover through the Reserve Bank of Fiji under the pilot.
Accessing insurance
Mudaliar said many Fijians are affected by heavy rainfall at different times of the year, making this product relevant and timely.
Creating parametric products is one way it is helping the Pacific Islands be ready for the future, Mudaliar said.
This isn’t the only parametric insurance product from Tower - in 2022, it launched a pilot for Cyclone Response Cover in Fiji. This was made available in Tonga and Samoa the following year.
Asked why Fiji was chosen to pilot the Rainfall Response Cover, Mudaliar said: “Our deep community ties make Fiji an ideal market to pilot innovative products that improve insurance accessibility.”
“Parametric presents a huge opportunity to change people’s lives for the better in the Pacific where insurance penetration is low,” Mudaliar said.
“In some countries, only 10% of homes are insured compared to over 90% in New Zealand.”
“Our parametric products, Cyclone Response Cover and Rainfall Response Cover, offer a simple alternative,” Mudaliar said.
“Customers’ cover is based on a location rather than a house, and if rainfall or wind-speed thresholds are met, they receive a guaranteed payout within seven days with no assessment required.
“This approach helps more people access protection and builds awareness of insurance in the region.”
Reserve Bank of Fiji deputy governor Esala Masitabua said these types of products were enabling communities and families living in areas affected by specific perils “to access insurance as a means of protection against financial loss.”
‘Easy case’ for parametric insurance
In October, during a panel discussion on insurance at the Adaptations Futures Conference 2025 in Christchurch, Intergovernmental Panel on Climate Change Working Group II vice chair Adelle Thomas said having specifically targeted forms of insurance like parametric insurance could help increase people's uptake of insurance.
Thomas, who has done research in the Caribbean, found smallholder farmers were interested in insurance if they could be guaranteed they would have a payment instead of having to get a claims adjuster out to their farm to figure out the damages.
“That’s where parametric insurance comes in, because once a hurricane or something reaches a certain strength, you automatically get paid out.”
But it was important to explain parametric insurance practically so people could understand and could see how this would make an impact on their lives and benefit them, Thomas said.
An example she used was an insurance company partnering with a local fishing organisation and working to help those in the fishing industry understand the need for insurance.
“So a fisherman could understand 'if I purchase this insurance then that means if there’s a big hurricane and I cannot fish for weeks and I don’t have any income, I would have this insurance to help support my family.'”
Thomas said having those innovative tools could help vulnerable people on the ground and makes insurance more available and affordable.
“I think this is one way to increase the uptake of insurance.”
A recent report from consumer advocacy organisation Consumer NZ has found a growing number of New Zealanders are ditching their traditional indemnity insurance because of the cost.
Insurance Council of New Zealand’s chief executive Kris Faafoi, who was also involved in the panel discussion, said at the time that New Zealand and the Pacific were starting to see parametric insurance.
“I think it essentially works when there’s a type of event and a severity of event, it just triggers a payment and there’s a certainty of the payment happening,” Faafoi said.
Going through a settlement process is not what was needed in an urgent situation, he said.
“I think it’s a relatively easy case for parametric [insurance] as we’re starting to see more of these extreme weather events in New Zealand.”
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