You may choose between various weather related risk mitigation requests based on geographical location and price risk mitigation requests based on the crops types to minimize your losses in the case of an unlikely, misfortunate events.
This guarantees you payback of the insured amount into your account in the case of such events occurring. Even if the events don’t occur but the value is in near proximity to the insured coefficient you are still eligible
for partial compensation.
You may offer parametric weather risk mitigation based on geographical location or price requests for various crops and receive a fee, dependend on your desired expected return.
This allows you, the investor, a new form of diversifying your portfolio, and earning an expected profit, for accurately pricing the probability of an adverse event.
Since this is a competitive bidding process, farmers have the option to choose the lowest cost offer from a variety of potential sellers. Sellers can price risk mitigation at the rate they see as profitable, but may not be chosen if their offer is not the lowest cost. This provides transparency and opens options for both buyers and sellers of parametric risk insurance.