Risk Management Solutions (RMS) has launched the first parametric index for assessing insured industry losses from windstorms in Europe.

Paradex Europe Windstorm combines wind speed measurements in specific locations with industry exposure data, and uses the modeled relationship between wind speed and damage to calculate insured loss estimates.

These estimates can be used by the insurance industry and capital markets to structure and monitor catastrophe bonds, industry loss warranties, and derivative contracts. Both issuers and investors benefit from the simplicity and transparency of a parametric index with the intuition of an industry loss index.

"As the market for insurance-linked securities has grown, the industry has been searching for loss indices to help structure deals," said Peter Nakada, managing director of RMS Consulting. "In the US, catastrophe bonds and industry loss warranties have been structured off an index called the Property Claims Service, but until now there has been no reliable and objective equivalent for windstorm risk in Europe."