Parametric Insurance—A Possible and Necessary Solution to Insure the Earthquake Risk of Romania

The rapid growth over recent decades of the impact natural disasters on economies, especially in vulnerable areas, urges stakeholders to promote innovative solutions involving risk transfers that account for new exposures. These proposed are designed optimize and expedite indemnification process, which can ultimately be beneficial both policyholders insurers alike. This article explores possibility supplementing current Romanian dwelling insurance protection scheme with a parametric mechanism. To determine triggering parameter pay-out, authors consider various hazard scenarios developed based historical events. paper focuses Probable Maximum Loss (PML) determination computed events epicenters Vrancea (a region mountain Carpathians) seismic area. area is most exposed Romania earthquakes, it includes capital, Bucharest, urban highest population concentration and, consequently, exposure discussed risks.