Parametric Insurance Market Size - By Coverage, By Distribution Channel, By Application, By End Use, Analysis, Share, Growth Forecast, 2025 - 2034

Parametric Insurance Market Size

The global parametric insurance market was valued at USD 16.2 billion in 2024 and is projected to grow at a CAGR of 12.6% between 2025 and 2034. Technological improvements, economic factors, and climate change have transformed the risk landscape within the insurance industry. Identifying, analyzing, and containing these issues are critical steps that insurers need to take. Complex risk management approaches are mandatory to control rapid natural calamities and world economic instability to avoid huge financial disasters. Investment into the assessment of risk has included advanced models, other artificial intelligence components and even data mining.
 

As an example, according to the information from the International Monetary Fund that shows the cost of cybercrime is estimated to reach USD 8.2 trillion for the FY 2022. Useful instruments and services that set out to prevent attackers from carrying out their malicious intentions are highly sought after as organizations need to locate, assess, and sort out risks.
 

Increasing competition, low interest rates, and an aging product portfolio coupled with currently low profitability have been the forefront afflictions for life insurers in recent years. With AI, new revenue opportunities can be developed with new solutions like parametric insurance, dynamic pricing, value added services or other engineered life-stage products particularly aimed at emerging middle-class markets.
 

As an example, IoT endpoints increased globally by 18 percent to reach 14.3 billion in December of 2022. One of the frequent activities undertaken as part of a digital transformation is the integration of different systems, applications, and platforms in the cloud, on-premises, or hybrid environments.
 

Parametric Insurance Market Trends

• The use of blockchain technology in parametric insurance records contracts and claims on decentralized ledgers, enhancing transparency and trust within the system. Additionally, smart contracts automate payments for claims where the triggers, usually natural disasters, pay out events are processed instantly and in real-time. The data can be verifiable in real-time and minimize fraud disputes as well.
   
• As an example, Brooklyn-based parametric blockchain Otonomi secured a deal with Greenlight Innovation Syndicate 3456, a Lloyds underwriter, enabling him to complete his launch requirements in March 2023. The use of Blockchain and oracles in parametric insurance reduces inefficiencies, administrative costs and also increases claim processing speed. The introduction of self-executing smart contracts eliminates middle agents ensuring that policy holders need and deserve amounts are deposited directly into their accounts faster.
   
• Machine Learning (ML) refines risk models and prediction algorithms by processing extensive historical and real-time data, identifying risk patterns, and continuously improving forecasts. ML enables dynamic pricing by updating models with new data, allowing insurers to adjust premiums and coverage more accurately.
   
• As an example, the global automated machine learning market size was valued at USD 1.4 billion in 2023 and is estimated to register a CAGR of over 30% between 2024 and 2032 due to more enhanced R&D activities. This explains how the growth in ML market directly impacts the growth of the parametric insurance market.
   

Parametric Insurance Market Analysis

Based on coverage, the parametric insurance market is divided into natural catastrophe insurance, specialty insurance, and others. In 2024, the natural catastrophe insurance segment dominated the market accounting for around 70% share and is expected to grow at a CAGR of over 12% during the forecast period.

• The rise in the amount and power of hurricanes, earthquakes, floods, and wildfires is moving insurance industries and governments toward parametric coverage. Natural disaster-vulnerable countries such as Japan and the U.S. are teaming up with private insurers to offer large-scale disaster risk coverage. Reinsurers and financial entities are using parametric models in catastrophe bonds to shift climate risk exposure.
   
• Due to climate change, droughts, floods, and hurricanes are increasing the need for parametric solutions in agriculture. Farmers and agribusiness are using policies that rely on revenue losses due to insufficient rainfall, abnormal high temperatures, or strong cyclones to lower the financial uncertainty and avoid losses economically.
   
• For instance, Mythen, an AI-driven parametric insurtech, started operating in Bermuda & Texas in March 2025. Mythen was founded by well-known insurtech leader Sandra DeSilva who has a focus on transforming natural catastrophe underwriting and management through AI, machine learning, remote sensing, and sophisticated modeling.
   

Based on end-use, the parametric insurance market is segmented into individual, corporate, and government. In 2024, the corporate segment dominates the market with 50% of market share and the segment is expected to grow at a CAGR of over 12% from 2025 to 2034.
 

• Businesses are rapidly utilizing parametric insurance for disaster recovery planning. These policies make instant payments, sometimes referred to as “first dollar payments,” for supply chain interruptions, severe weather conditions, and even cyberattacks as long as certain conditions such as wind speed and rainfall or network downtime are met over claims processing.
   
• Manufacturing, retail, and logistic firms financially benefit from the instant payment options available through parametric insurance. For instance, a factory can receive payment instantly for operational losses due to a flooding caused shut down, or an extreme weather delayed shipment.
   
• In March 2025, Weather Risk Management Services (WRMS) partnered with UN’s World Food Programme (WFP) and launched the first Iraq parametric insurance pilot schemes for smallholder farmers and micro-entrepreneurs. Sharply focused these current programs to broaden the scope of climate related risk protection with special attention being given to the risks of droughts and heat waves.
   

Based on the distribution channel, the parametric insurance market is segmented into direct sales, brokers/agents, online platforms, banks, and others, with the brokers/agents category expected to dominate due to their ability to offer customized risk solutions tailored to specific industries such as agriculture, energy, and travel.
 

• Insurtechs are redefining the traditional broker model by offering parametric solutions in conjunction with traditional brokers. These integrations enable brokers to sell policies using real-time risk information, automation of claims, and AI pricing enabling more and easier access to automated and parametrically offered policies.
   
• Guy Carpenter and Marsh are two experts in the field whose endorsements drive insurance companies to bid on over-arching catastrophe risk parametric solutions due to special focus placed on these products in the market. Other industries benefitting from their broker-led products include extreme weather coverage, earthquake risk reinsurance, and modeling for business interruption.
   
• As an example, to accompany their existing agriculture, energy, and tourism climate risk policies, Marsh partnered with satellite-data providers in September 2023. The initiative allows brokers to issue real-time data-driven parametric coverage during and after extreme weather events to ensure automation of payments subject to verified weather conditions.
   

In 2024, the U.S. region in North America dominated the parametric insurance market with around 91% market share and generated around USD 5.5 billion in revenue.
 

• The increase in the frequency rate of climate-related disasters and earthquakes coupled with the overwhelming damage they cause has necessitated the urgent need for businesses in the U.S. to shift toward adopting new technology that will supply faster payouts and coverage solutions due to accelerating risk evaluation processes.
   
• November 2024 saw the introduction of Syndicate 3939 at Lloyds, London by NormanMax Insurance Holdings. This U.S. based parametric reinsurance group insured Apollo for hurricanes, and has now expanded to Tropical cyclones, Typhoons, Earthquakes, and other natural catastrophes. This pioneering syndicate exclusively caters to parametric re and insurance cover swaps.
   
• Canadian enterprises facing the increasing incidence of breakthrough climatic changes causing unprecedented turmoil are now switching to new and faster insurance payout mechanisms which ensure minimal down time by using automated risk evaluation features.
   

The parametric insurance market in Germany is expected to experience significant and promising growth from 2025 to 2034.
 

• Growing climate related threats like floods and storms are creating an opportunity for Germany's parametric insurance market to grow. Insurers and government institutions are facilitating disaster risk financing options, particularly for businesses and municipalities that are prone to extreme weather. Germany’s agricultural sector is a front runner, deploying weather-indexed policies to reduce crop failure.
   
• In Germany, there are climate change-related concerns that are forcing businesses to adapt innovative coverage like focusing on quick payouts for natural disasters and improving overall risk management.
   
• As an example, in February 2024, Munich Re started a new divisional unit with a complete focus on parametric risk transfer, specifically dealing with natural catastrophe risks. The objective is to improve the company’s reputation in the insurance market by innovating over the standard parametric provision of funds and covering otherwise uninsurable risks.
   

The parametric insurance market in the China is expected to experience significant and promising growth from 2025 to 2034.
 

• China has been quicker to adopt parametric insurance than other nations due to an increase in climate-related catastrophes such as flooding, droughts, and typhoons. The government is heavily involved in funding disaster risk management, bringing in parametric models into the insurance sector. Insurance offerings specially designed to aid farmers and agri-businesses protect against adverse weather are made available.
   
• Similarly, in China, the increased risk of marine environments’ destruction as a result of climate change is encouraging businesses to implement novel forms of coverage that emphasize aiding industries affected by environmental damage in recovering financially – known as environmental engineering.
   
• To illustrate, in China’s Dalian City, Ping and Property & Casualty Insurance Company commenced their ocean carbon sink index insurance policy in February 2023. This is the company’s first step in endeavoring to protect the ocean’s health.
   

The parametric insurance market in Saudi Arabia is expected to experience significant and promising growth from 2025 to 2034.
 

• The risks of climate change such as extreme heat, sandstorms, and flash floods are contributing to the South Arabian region's adapting parametric insurance market. The government is also encouraging financing for disaster risk areas to enhance resilience in agriculture, infrastructure, and energy. Adoption of AI alongside satellite monitoring and blockchain technology is fueling the capture of real time data for accurate payout purposes.
   
• In Saudi Arabia, innovative Extreme Weather and Environmental Change Coverage Builders initiatives are being made possible through government sponsorship, which motivates firms to adopt strategies that provide instant funding in the wake of certain risks being triggered.
   
• For example, in September 2024, the Saudi Insurance Authority launched new sandbox legislation to develop an insured space which is defined as regulated, risk-free and is accessible to anyone from the entrepreneurial and company sectors. The goal is to promote the digitization of the insurance industry whilst also helping to achieve the goals encapsulated under Saudi Arabia's Vision 2030.
   

Parametric Insurance Market Share

• Top 7 companies in the parametric insurance industry are AXA, AIG (American International Group), Allianz, Aon, Berkshire Hathaway Specialty Insurance, Chubb, and Lloyd's of London contributes around 51% of the market in 2024.
   
• AXA enables quick payouts for the risks of climate change and natural disasters by making use of parametric insurance. Automated claims processing is triggered by the use of satellites and IoT, which speeds up the time taken to respond to the claim. This company works with governments and businesses to increase their financial capabilities, especially in agriculture and energy. Moreover, it uses AI risk modeling to further improve the company’s coverage options.
   
• Munich Re is busy arranging innovative solutions for risk transfer, one of which is the use of highly specialized parametric insurance that covers natural disasters and extreme weather events. In addition, the company employs data analytics the same as with satellite and climate model imagery for accurate and fast claim payments. It now works with insurers, corporations, and governments to design custom-tailored parametric products, particularly in developing regions where conventional insurance is not so easily accessed.
   
• Swiss Re has prioritized climate adaptability with the provision of parametric insurance solutions like cover for weather and catastrophe risks. Such services also rely on other forms of satellite monitoring support along with the use of blockchain technology for more efficient settlements of claims. This company resumed developing strategies with insurers and state funded institutions to offer more agricultural and renewable energy based parametric solutions. AI powered predictive analytics are part of the advances made in the underwriting process by the company.
   

Parametric Insurance Market Companies

Major players operating in the parametric insurance industry are:

• AXA
• AIG (American International Group)
• Allianz
• Aon
• Berkshire Hathaway Specialty Insurance
• Chubb
• Lloyd of London
• Marsh & McLennan
• Munich Re
• Swiss Re
   

The majority of companies operating in the “parametric” insurance market are concerned with technology-based risk evaluation using satellite images, IoT, and AI to improve payout accuracy. They provide sector-based solutions in agriculture, energy, travel, etc. Collaborations with governments, reinsurers, and financial service companies further increase coverage particularly in areas with high catastrophic event risk. Moreover, insurers actively engage in, and promote, teaching customers to use digital technologies for effortless policy maintenance, including purchase and claim submission.
 

Widespread focus is on new regions, especially the Asia Pacific, Latin America and Africa, for which climate change is a risk and there is no corresponding financial protection. There is also a deliberate attempt to create an effective micro insurance scheme for small businesses and farmers to increase the level of penetration. Also, these companies intend to enhance the idiosyncratic data-driven pricing models with straightforward payout terms. There is a growing direction towards the implementation of blockchains and smart contracts to facilitate automatic claim payments with no administrative intervention, thus minimizing costs and the possibility of fraud.
 

Parametric Insurance Industry News

• Anansi collaborated with Tokio Marine HCC, Liberty Mutual, and Arch Insurance in May 2024 to establish a groundbreaking parametric insurance solution for goods-in-transit aimed at large retailers. Due to these insurers’ innovations, this new product is expected to revolutionize the existing goods-in-transit insurance paradigm by utilizing automated systems for payment when specific triggers like parcel losses occur. The solution extends the limit of coverage from 25,000 to 100,000 pounds sterling which is required by leviathan retailers and international freight forwarding companies.
   
• In May 2024, Lloyd’s entered into a Memorandum of Understanding with Edinburgh Monetary Authority for collaboration on the international insurance market industry. It aims to encourage creativity, exchange knowledge, and advance outreach strategies for both entities and their cultures. This document also puts emphasis on the need to institute regulatory linkages that provide for the most appropriate industry practices and improve the management of risks for the entire insurance domain. After signing the document, the two parties will jointly seek ways to leverage Lloyd's Lab, including sponsoring a re-insurance contest for cohort fourteen of Lloyd’s lab accelerator program.
   
• In September 2024, Tower, an insurer based in New Zealand and the Pacific Islands, teamed up with CelsiusPro, an insurtech company, to launch an Information Technology (IT) platform that will facilitate the distribution of parametric insurance. This collaboration seeks to improve Tower's Cyclone Response Cover, which is a form of parametric insurance that pays policyholders for loss of money due to high wind tropical cyclones, without any physical damage. The platform uses CelsiusPro's White Label technology and combines it with data from the Joint Typhoon Warning Center (JTWC) to automatically pay out when certain levels of cyclone wind speeds are reached.
   
• In April 2024, Arbol, a technology and software-driven underwriter with a focus on parametric risk transfer and climate insurance, started Lilypad Insurance, a homeowners specialist carrier. Lilypad acquired Centauri Insurance from Applied Underwriters. This purchase marks Arbol's entry into the United States (U.S.) market for post indemnity homeowner’s insurance. This acquisition is seen as a blended distribution channel that helps Arbol increase the target market for parametric risk transfer, as reported by Artemis.
   

The parametric insurance market research report includes in-depth coverage of the industry with estimates & forecasts in terms of revenue ($ Mn/Bn) from 2021 to 2034, for the following segments:

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Market, By Coverage

• Natural catastrophe insurance
• Specialty insurance
• Others

Market, By Distribution Channel

• Direct sales
• Brokers/Agents
• Online platforms
• Banks
• Others

Market, By Application

• Agriculture
• Energy & utilities
• Real estate
• Construction
• Healthcare
• Marine
• SME
• Retail
• Travel & tourism
• Others

Market, By End Use

• Individual
• Corporate
• Government

The above information is provided for the following regions and countries:

• North America
  • U.S.
  • Canada
• Europe
  • Germany
  • UK
  • France
  • Italy
  • Spain
  • Russia
  • Nordics
• Asia Pacific
  • China
  • Japan
  • India
  • South Korea
  • ANZ
  • Southeast Asia
• Latin America
  • Brazil
  • Mexico
  • Argentina 
• MEA
  • UAE
  • Saudi Arabia
  • South Africa