Parametric Insurance Market Analysis

Parametric Insurance Market Analysis

To get key market trends

  Download Free Sample

Based on end use, the market is categorized into individual, corporate, and government. The corporate segment is expected to hold over 45% in 2023. Parametric insurance promotes corporate resilience by enabling quicker recovery and continued operations after a triggering event. Businesses that operate in industries susceptible to weather-related interruptions/natural disasters benefit the most from this, as downtime can have a big financial impact.
 

Additionally, corporates are also looking for strong insurance solutions that can react swiftly & efficiently to unanticipated occurrences anywhere in the world, as global supply chains become more intertwined and vulnerable to disruptions from natural disasters/geopolitical crises. Thus, the global reach & adaptability of parametric insurance meet the changing demands of multinational businesses.
 

Based on coverage, the parametric insurance market is divided into natural catastrophe insurance, specialty insurance, and others. In 2023, the natural catastrophe insurance segment accounted for a market share of over 56%. The need for natural catastrophe insurance is rising for several reasons, the most significant being the global increase in both the frequency and intensity of natural disasters. Increased frequency & intensity of natural catastrophes, including hurricanes, floods, wildfires, and storms, are a result of climate change. To reduce financial losses, there is a greater need for insurance coverage against these occurrences.
 

Moreover, lenders and regulatory bodies occasionally demand natural disaster insurance from companies and property owners in high-risk areas to grant loans/building permits. The need for coverage is fueled by this legal obligation.
 

North America dominated the parametric insurance market with around 35% in 2023 of the revenue share in 2023. The market growth is driven by the increasing frequency of digital threats and strict regulatory requirements. North America is prone to several natural catastrophes, including hurricanes, earthquakes, wildfires, floods, and severe storms, resulting in significant property damage, business interruption, and economic losses. With quick payouts, dependent on predetermined triggers, including wind speed, earthquake magnitude, or rainfall levels, parametric insurance offers a simplified & effective means of providing financial protection against these hazards.
 

Parametric insurance plays a vital role in Europe's climate change adaptation strategies by incentivizing investments in sustainable infrastructure, disaster risk reduction, and climate resilience measures. The insurers and policymakers collaborate to promote parametric insurance as a tool for building adaptive capacity and addressing emerging climate risks.
 

The Asia Pacific region is experiencing significant investments in infrastructure projects, along with fast economic expansion & urbanization. Parametric insurance promotes resilient economies and sustainable growth in developing nations by safeguarding these investments from possible losses brought on by natural disasters.