Swiss Re has launched what it claims is the first US public-private partnership of its kind in a deal with the Alabama State Insurance Fund.

The reinsurer last week announced a three-year “parametric” insurance cover for the fund’s primary catastrophic hurricane exposure.

Parametric covers pay out a pre-determined amount of compensation should a disaster exceed certain parameters. They can be used for a range of costs, including emergency response funding, replacement of lost tax revenue and the increased cost of insurance.

Swiss Re CRO Raj Singh says the deal marks the first time a US state government has utilised such a structure to protect its natural catastrophe exposures.

“Until now, governments, and ultimately taxpayers, have been left shouldering the burden of paying for emergency expenses and reconstruction well after the disaster has passed,” he said.

Alabama Department of Finance Risk Manager Ben Spillers says the agreement allows the state to receive funds “rapidly to cover our immediate costs, based simply on the wind speed of a hurricane”.

The agreement follows a number of similar arrangements between Swiss Re and public authorities worldwide, while company representatives travelled to Australia recently to discuss local prospects with government agencies along the eastern seaboard.

Swiss Re says public-private arrangements are suitable for mitigating the risk of a range of catastrophes including hurricanes, bushfires and earthquakes.