Abstract
Parametric insurance is a viable and innovative type of insurance product, despite not being regulated by many jurisdictions, including South Africa. The use thereof is becoming increasingly popular as an insurance mechanism to address the consequences of climate-change events. Parametric insurance is effective as it provides timeous cover for vulnerable populations that suffer the consequences of climate-change events; and in providing cover to such populations, insurance is made more accessible and financial inclusion is promoted. However, implementing parametric insurance is not without challenges. It is heavily reliant on data for modelling purposes and the risk exists that payments are carried out without loss having been suffered is possible. It is therefore challenging to classify parametric insurance as insurance considering the traditional indemnity theory. Certain measures would have to be put in place for the successful formalisation of parametric insurance, which entail a certain degree of establishing loss, but without hindering the timeous payouts affiliated with parametric insurance. There have been a few developments of the traditional indemnity theory in terms of the adapted indemnity theory which were largely based on public policy. Therefore, this dissertation submits that parametric insurance may also be developed according to the adapted indemnity theory, on the basis of public policy.