Parametric Insurance Market Report 2025

The parametric insurance market size is expected to see rapid growth in the next few years. It will grow to $34.35 billion in 2029 at a compound annual growth rate (CAGR) of 13%. The growth in the forecast period can be attributed to growing impact of climate change, expansion of emerging markets, integration of AI and big data analytics, government support and regulation, consumer demand for customization. Major trends in the forecast period include integration of blockchain technology, expansion into new risk types, collaboration with Insurtech startups, increased use of satellite and remote sensing data, greater adoption in agriculture and crop insurance.

The forecast of 13% growth over the next five years reflects a slight reduction of 0.1% from the previous projection. This reduction is primarily due to the impact of tariffs between the US and other countries. This is likely to directly affect the US through less accurate trigger mechanisms, as weather data verification systems and automated claims processing tools, largely imported from Switzerland and the Netherlands, become subject to maintenance cost increases. The effect will also be felt more widely due to reciprocal tariffs and the negative effect on the global economy and trade due to increased trade tensions and restrictions.

The parametric insurance market size is expected to see rapid growth in the next few years. It will grow to $34.59 billion in 2029 at a compound annual growth rate (CAGR) of 16.6%. The growth in the forecast period can be attributed to the escalating effects of climate change, the expansion of emerging markets, the integration of artificial intelligence and big data analytics, government support and regulatory initiatives, and growing consumer demand for customized insurance solutions. Key trends in the forecast period include the integration of blockchain technology, expansion into new categories of risk, partnerships with Insurtech startups, increased use of satellite and remote sensing technologies, and wider adoption in agriculture and crop insurance.

Increasing natural disasters are expected to drive the growth of the parametric insurance market in the coming years. Natural disasters such as earthquakes, hurricanes, and floods cause widespread destruction, loss of life, and significant economic damage. The frequency and severity of these events are rising due to climate change, as global temperatures increase and lead to more extreme weather conditions. Parametric insurance, which provides rapid payouts based on predefined triggers, serves as an effective financial risk management tool in these scenarios. For example, in July 2023, AON, a UK-based insurance company, reported that global economic losses from natural disasters reached $313 billion in 2022, with insured losses accounting for $132 billion, ranking it as the fifth-costliest year for insurers. Additionally, the reinsurance market experienced premium increases of up to 35% in the U.S. by 2023. As a result, the rising number of natural disasters is contributing to the expansion of the parametric insurance market.

Leading companies in the parametric insurance market are adopting AI-driven predictive analytics to improve risk assessment, trigger accuracy, and expedite data-driven payouts. These analytics apply machine learning and statistical models to assess historical and real-time data, detect trends, and generate predictive insights to inform insurance decisions. For instance, in March 2025, Arbol, Inc., a U.S.-based climate risk platform and FinTech firm, integrated AI-powered predictive analytics into its parametric insurance services using real-time weather data, machine learning, and IoT sensors. This approach enables quicker, automated payouts and financial stability for specialty crop producers facing climate-related threats. Arbol also uses blockchain to streamline policy issuance, premium transactions, and claims processing, enhancing transparency and reducing administrative costs.

In September 2023, CelsiusPro, a Switzerland-based provider of climate risk technology and parametric insurance, acquired Global Parametrics for an undisclosed amount. The acquisition aims to broaden Global Parametrics’ reach and boost its ability to deliver innovative risk transfer products for climate and natural disasters. This move also supports the company’s efforts to improve access to financial protection, increase operational scale, and strengthen resilience in underserved communities. Global Parametrics is a UK-based provider of parametric insurance solutions.

Major players in the parametric insurance market are Berkshire Hathaway Inc., Allianz SE, Zurich Insurance Group Ltd., Chubb Limited, Tokio Marine Holdings, Inc., Swiss Reinsurance Company, AIG (American International Group), Lloyds Banking Group, Marsh & McLennan, QBE Insurance Group Limited, SCOR SE, Aon plc, Everest Re Group, Ltd., Willis Towers Watson, PartnerRe Ltd., AXA SA, Munich Reinsurance Company, Hannover Re, Neptune Flood Incorporated, Jumpstart Insurance Solutions Inc.

North America was the largest region in the parametric insurance market in 2024. Asia-Pacific is expected to be the fastest-growing region in the forecast period. The regions covered in parametric insurance report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East and Africa. The countries covered in the parametric insurance market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Russia, South Korea, UK, USA, Canada, Italy, Spain.

The parametric insurance market includes revenues earned by entities by providing services such as risk transfer solutions, climate and disaster insurance, agricultural coverage, catastrophe bonds, and InsurTech-based underwriting. The market value includes the value of related goods sold by the service provider or included within the service offering. Only goods and services traded between entities or sold to end consumers are included.

The market value is defined as the revenues that enterprises gain from the sale of goods and/or services within the specified market and geography through sales, grants, or donations in terms of the currency (in USD, unless otherwise specified).

The sharp rise in U.S. tariffs and the ensuing trade tensions in spring 2025 are having a considerable impact on the financial sector, particularly in the areas of investment strategies and risk management. The increased tariffs have intensified market volatility, leading institutional investors to adopt more cautious approaches and driving greater demand for hedging solutions. Banks and asset managers are encountering higher costs in cross-border transactions as disrupted global supply chains and declining corporate earnings weigh on equity market performance. At the same time, insurance providers are facing elevated claims risks linked to supply chain interruptions and trade-related business losses. Furthermore, reduced consumer spending and weaker export demand are limiting credit growth and dampening investment appetite. In response to these challenges, the sector must focus on diversification, accelerate digital transformation, and strengthen scenario planning to manage the heightened economic uncertainty and safeguard profitability.

The primary types of parametric insurance include index-based insurance, weather-based insurance, catastrophe bonds, and others. Index-based insurance involves making payouts based on specific indices, such as weather patterns or crop yields, instead of actual damages incurred. These policies can vary in duration, including short-term, long-term, and seasonal policies, and are distributed through direct sales, brokers, and online platforms. They are used across various industry sectors such as agriculture, aerospace and defense, mining, construction, energy and utilities, manufacturing, and others.

Parametric insurance is a form of coverage where payouts are triggered by predefined parameters or events such as specific weather conditions, natural disasters, or other measurable criteria rather than the actual loss experienced by the policyholder. This model streamlines the claims process by eliminating the need for physical damage assessments, enabling quicker compensation when the triggering event occurs.

Note that the outlook for this market is being affected by rapid changes in trade relations and tariffs globally. The report will be updated prior to delivery to reflect the latest status, including revised forecasts and quantified impact analysis. The report’s Recommendations and Conclusions sections will be updated to give strategies for entities dealing with the fast-moving international environment.

The parametric insurance market size has grown rapidly in recent years. It will grow from $18.71 billion in 2024 to $21.09 billion in 2025 at a compound annual growth rate (CAGR) of 12.7%. The growth in the historic period can be attributed to increasing frequency of natural disasters, advancements in technology, demand for faster claims processing, rise in climate change awareness, globalization and business risk management.

The revenues for a specified geography are consumption values that are revenues generated by organizations in the specified geography within the market, irrespective of where they are produced. It does not include revenues from resales along the supply chain, either further along the supply chain or as part of other products.

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