Parametric Insurance Market Size

Parametric Insurance Market size is evaluated at USD 16.6 billion in 2024 and is projected to exceed USD 62.7 billion by the end of 2037, witnessing over 11.7% CAGR during the forecast period i.e., between 2025-2037. In 2025, the industry size of parametric insurance is estimated at USD 18.5 billion.

Parametric insurance is gaining traction in business and industry domains, with firms focusing more on derivation to innovative methods of risk management to tackle unforeseen climate and other related events. Contrasting with traditional method of compensation, parametric insurance offers a predetermined payout on an expected set of triggers, usually extreme weather events, natural disasters, or even other measurable occurrences. This streamlined approach allows for faster processing of claims and high transparency therefore, it holds a crucial place in the risk portfolio of those industries that face high environmental volatility and is driving high demand in the parametric insurance market.

Key drivers for this market are mounting natural disaster frequency and severity due to climate change, and increasing demand for quick financial recovery in agriculture, energy, construction, and tourism. Also, businesses are involving parametric insurance in their diversification strategy to manage rare. For instance, in September 2024, Tower, announced its partnership with CelciusPro to launch a trendsetting IT platform to streamline the parametric insurance distribution.