In 2023, the global parametric insurance market was worth $18 billion, and it is expected to grow to $34.4 billion by 2033, with a CAGR of 6.6% from 2024 to 2033. Parametric Insurance Market is an innovative risk management solution that provides coverage based on the occurrence of predefined events, rather than the traditional indemnity model that relies on assessing actual losses. This type of parametric insurance market offers several benefits, including faster payouts since claims are triggered by objective parameters, such as a specific amount of rainfall or wind speed, reducing the need for time-consuming loss assessments.
It enhances transparency and reduces disputes over claims, as the criteria for payouts are clearly defined and agreed upon in advance. In addition, parametric insurance covers a wide range of risks, including those that are difficult to insure through traditional methods, making it a versatile tool for managing both natural and man-made disasters in Parametric Insurance Market .
It helps businesses and individuals recover more swiftly from adverse events by providing quick financial relief, thereby improving resilience and stability. The increase in frequency and severity of natural disasters, driven by climate change, has highlighted the need for quicker and more efficient claims processes, which drive the Parametric Insurance Market Growth of Parametric Insurance Market. In addition, technological advancements, such as improved data analytics and the proliferation of IoT devices, boost the demand for parametric insurance model. Moreover, rise in awareness and acceptance of alternative risk transfer solutions drive market growth.
Furthermore, expanding parametric insurance market size across regions, leveraging big data & AI to refine risk models, and increasing innovative products tailored to specific risks such as pandemics or cyber events are expected to provide lucrative Paramtric insurance market opportunity for market growth during the forecast period. However, the complexity of accurately defining and measuring parameters, and regulatory challenges in different jurisdictions. Overcoming these hurdles is expected to be crucial for the widespread adoption and success of parametric insurance market coming years.
The parametric insurance industry has experienced significant growth as it addresses the surge in demand for more efficient and transparent risk management solutions. Unlike traditional insurance models, parametric insurance offers quick payouts on the basis of predefined criteria, which is particularly valuable in managing natural disaster risks and other high-frequency, high-impact events. The industry expansion is fueled by advancements in data analytics, IoT technology, and the rise in acceptance of alternative risk transfer solutions.
These developments enhance the precision of risk assessment and trigger mechanisms, making parametric insurance more attractive to both businesses and individuals. However, the industry navigates challenges such as accurately defining parameters, managing basis risk, and complying with diverse regulatory environments. Addressing these obstacles is expected to be essential for leveraging the full potential of the parametric insurance market.
The parametric insurance market is segmented on the basis of type, industry vertical, and region.
By type, it is divided into natural catastrophes, specialty insurance, and others. By industry vertical, it is segregated into agriculture, construction, mining, manufacturing, energy & utility, aerospace & defense, and others. By region, it is analyzed across North America, Europe, Asia-Pacific, and LAMEA. By type, the natural catastrophe segment attained the highest growth during 2023.
This is attributed to the fact that the continuous rises in commercial insurance pricing, along with a widening risk spectrum, are piquing organizations' interests and leading many to implement parametric solutions to their insurance portfolios. Region-wise, North America acquired the highest parametric insurance market share in 2023. This is attributed to the extent and severity of climate-related weather events, which have become increasingly severe and unpredictable in North America, thus, increasing need for parametric covering in Parametric Insurance Market Analysis.
The report analyzes the profiles of key players operating in the parametric insurance market, such as Munich Re, QBE Insurance Group Limited, Hannover, Rück SE, Chubb, Jumpstart Insurance Solutions, Inc., AXA XL, FloodFlash, Global Parametrics, Swiss Re, Zurich American Insurance Company, SCOR SE, Sompo Holdings, Inc., Beazley Group, Allianz and Berkshire Hathaway Specialty Insurance. These players have adopted various strategies to increase their market penetration and strengthen their position in the parametric insurance industry in Parametric Insurance Market Trends.
Information about key drivers, restrains, & opportunities and their impact analysis on the global parametric insurance market size are provided in the report.
Porter’s five forces analysis illustrates the potency of buyers and suppliers operating in the Parametric Insurance Market industry.
The quantitative analysis of the global commercial property insurance market from 2023 to 2033 is provided to determine the Parametric Insurance Market potential.
It enhances transparency and reduces disputes over claims, as the criteria for payouts are clearly defined and agreed upon in advance. In addition, parametric insurance covers a wide range of risks, including those that are difficult to insure through traditional methods, making it a versatile tool for managing both natural and man-made disasters in Parametric Insurance Market .
It helps businesses and individuals recover more swiftly from adverse events by providing quick financial relief, thereby improving resilience and stability. The increase in frequency and severity of natural disasters, driven by climate change, has highlighted the need for quicker and more efficient claims processes, which drive the Parametric Insurance Market Growth of Parametric Insurance Market. In addition, technological advancements, such as improved data analytics and the proliferation of IoT devices, boost the demand for parametric insurance model. Moreover, rise in awareness and acceptance of alternative risk transfer solutions drive market growth.
Furthermore, expanding parametric insurance market size across regions, leveraging big data & AI to refine risk models, and increasing innovative products tailored to specific risks such as pandemics or cyber events are expected to provide lucrative Paramtric insurance market opportunity for market growth during the forecast period. However, the complexity of accurately defining and measuring parameters, and regulatory challenges in different jurisdictions. Overcoming these hurdles is expected to be crucial for the widespread adoption and success of parametric insurance market coming years.
The parametric insurance industry has experienced significant growth as it addresses the surge in demand for more efficient and transparent risk management solutions. Unlike traditional insurance models, parametric insurance offers quick payouts on the basis of predefined criteria, which is particularly valuable in managing natural disaster risks and other high-frequency, high-impact events. The industry expansion is fueled by advancements in data analytics, IoT technology, and the rise in acceptance of alternative risk transfer solutions.
These developments enhance the precision of risk assessment and trigger mechanisms, making parametric insurance more attractive to both businesses and individuals. However, the industry navigates challenges such as accurately defining parameters, managing basis risk, and complying with diverse regulatory environments. Addressing these obstacles is expected to be essential for leveraging the full potential of the parametric insurance market.
The parametric insurance market is segmented on the basis of type, industry vertical, and region.
By type, it is divided into natural catastrophes, specialty insurance, and others. By industry vertical, it is segregated into agriculture, construction, mining, manufacturing, energy & utility, aerospace & defense, and others. By region, it is analyzed across North America, Europe, Asia-Pacific, and LAMEA. By type, the natural catastrophe segment attained the highest growth during 2023.
This is attributed to the fact that the continuous rises in commercial insurance pricing, along with a widening risk spectrum, are piquing organizations' interests and leading many to implement parametric solutions to their insurance portfolios. Region-wise, North America acquired the highest parametric insurance market share in 2023. This is attributed to the extent and severity of climate-related weather events, which have become increasingly severe and unpredictable in North America, thus, increasing need for parametric covering in Parametric Insurance Market Analysis.
The report analyzes the profiles of key players operating in the parametric insurance market, such as Munich Re, QBE Insurance Group Limited, Hannover, Rück SE, Chubb, Jumpstart Insurance Solutions, Inc., AXA XL, FloodFlash, Global Parametrics, Swiss Re, Zurich American Insurance Company, SCOR SE, Sompo Holdings, Inc., Beazley Group, Allianz and Berkshire Hathaway Specialty Insurance. These players have adopted various strategies to increase their market penetration and strengthen their position in the parametric insurance industry in Parametric Insurance Market Trends.
Key Benefits for Stakeholders
The study provides in-depth analysis of the global parametric insurance market along with the current & future Parametric Insurance Market Trends to illustrate the imminent investment pockets.Information about key drivers, restrains, & opportunities and their impact analysis on the global parametric insurance market size are provided in the report.
Porter’s five forces analysis illustrates the potency of buyers and suppliers operating in the Parametric Insurance Market industry.
The quantitative analysis of the global commercial property insurance market from 2023 to 2033 is provided to determine the Parametric Insurance Market potential.
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Key Market Segments
By Type
- Natural Catastrophes Insurance
- Specialty Insurance
- Others
By Industry Vertical
- Agriculture
- Aerospace and Defense
- Mining
- Construction
- Energy and Utilities
- Manufacturing
- Others
By Region
- North America
- U.S.
- Canada
- Europe
- UK
- Germany
- France
- Italy
- Spain
- Rest of Europe
- Asia-Pacific
- China
- Japan
- India
- Australia
- South Korea
- Rest of Asia-Pacific
- LAMEA
- Latin America
- Middle East
- Africa
Key Market Players
- Allianz
- AXA XL
- Beazley Group
- Berkshire Hathaway Specialty Insurance
- Chubb
- FloodFlash
- Global Parametrics
- Hannover Rück SE
- Jumpstart Insurance Solutions, Inc.
- Munich Re
- QBE Insurance Group Limited
- SCOR SE
- Sompo Holdings, Inc.
- Swiss Re
- Zurich American Insurance Company
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Table of Contents
CHAPTER 1: INTRODUCTION
CHAPTER 2: EXECUTIVE SUMMARY
CHAPTER 3: MARKET OVERVIEW
CHAPTER 4: PARAMETRIC INSURANCE MARKET, BY TYPE
CHAPTER 5: PARAMETRIC INSURANCE MARKET, BY INDUSTRY VERTICAL
CHAPTER 6: PARAMETRIC INSURANCE MARKET, BY REGION
CHAPTER 7: COMPETITIVE LANDSCAPE
CHAPTER 8: COMPANY PROFILES
LIST OF TABLES
LIST OF FIGURES
Executive Summary
According to this report titled, 'Parametric Insurance Market,' the parametric insurance market was valued at $11.7 billion in 2021, and is estimated to reach $29.3 billion by 2031, growing at a CAGR of 9.9% from 2022 to 2031.Parametric insurance coverage differs from traditional insurance as it is not claims driven, with payouts made to customers after a loss. Instead, parametric insurance uses triggers or indexes (not claims) to payout after a specific event has occurred. Policyholders, therefore, are insured against a specific event with payments based on a predefined parameter, rather than the amount of a specific claim or loss. Parametric triggers can be applied to a range of loss types, from hotel occupancy rates to flight delays to the depth of a flood. Generally, a parametric contract includes the client, a specific parameter or index (the trigger), the contract or output (a payment amount), a third party or analytical agent responsible for verifying the trigger (i.e., a government agency), and the capital provider. Thus, these factors can be concluded as parametric insurance definition.
In recent years, insurtech entrants have helped incumbents recognize the need for innovation and flexibility when it comes to underwriting risk and creating new product solutions. Parametric insurance, which is powered by sophisticated analytics, new data sets, and innovative technologies, provides an opportunity for incumbents looking to supplement and evolve their approach to loss prevention/mitigation and disaster financing. Furthermore, parametric contracts solve a multitude of problems for insurers by protecting against economic losses and increase in risk awareness by sourcing additional capacity and providing liquidity through pre-defined payouts. In addition, it helps to develop embedded insurance products and micro-offerings in areas where traditional individual coverage is extremely limited or non-existent (for example, flight delay insurance), benefiting the parametric insurance market trends. Thus, these factors promote the growth of the parametric insurance industry.
The parametric insurance market is segmented on the basis of type, end user, and region. By type, it is segmented into natural catastrophes, specialty insurance, and others. By end user, it is segregated into agriculture, construction, mining, manufacturing, energy and utility, aerospace and defense, and others. By region, it is analyzed across North America, Europe, Asia-Pacific, and LAMEA
On the basis of industry vertical, the construction segment is expected to grow at a fastest rate during the forecast period. This is attributed to the fact that traditional property damage plans ignore the impact of seasonal fluctuations in temperature, rainfall, or snow on a portfolio of construction projects, despite the fact that this cost is frequently significantly higher than the cost of repairing a structure after flooding or wind damage. Hence, the parametric insurance cover is increasingly helping contractors to mitigate weather related perils during construction and operations.
By region, the global parametric insurance market is being dominated by North America in 2021, and is expected to maintain this trend during the forecast period. This is attributed to the fact that parametric insurance has become a more feasible alternative for helping organizations create climate resilience and boost catastrophe response and recovery in places such as the U.S. and Canada. Moreover, insurance companies are increasingly expanding their parametric insurance business to North America, resulting in the growth of the market.
The parametric insurance market has been positively impacted by the COVID-19 outbreak. This is attributed to the fact that consumer trends toward parametric insurance are changing and key players in the market are adopting technologies, such as artificial intelligence-based solutions for claim processing & cognitive automation for real-time interaction with consumers. Moreover, to curb the spread of the virus, several insurance companies have streamlined their process of claim settlements and insurance services in the market. Furthermore, AI technology aids in tracking real-time insured data, allowing for better services during the pandemic. These factors, promote the parametric insurance market growth during the pandemic situation.
Key findings of the Study
- By type, the natural catastrophe segment led the parametric insurance market in terms of revenue in 2021.
- By industry vertical, the agriculture segment accounted for the highest parametric insurance market share in 2021.
- By region, North America generated the highest parametric insurance market size in 2021.
Companies Mentioned
- Allianz
- AXA XL
- Beazley Group
- Berkshire Hathaway Specialty Insurance
- Chubb
- FloodFlash
- Global Parametrics
- Hannover Rück SE
- Jumpstart Insurance Solutions, Inc.
- Munich Re
- QBE Insurance Group Limited
- SCOR SE
- Sompo Holdings, Inc.
- Swiss Re
- Zurich American Insurance Company
Methodology
The analyst offers exhaustive research and analysis based on a wide variety of factual inputs, which largely include interviews with industry participants, reliable statistics, and regional intelligence. The in-house industry experts play an instrumental role in designing analytic tools and models, tailored to the requirements of a particular industry segment. The primary research efforts include reaching out participants through mail, tele-conversations, referrals, professional networks, and face-to-face interactions.
They are also in professional corporate relations with various companies that allow them greater flexibility for reaching out to industry participants and commentators for interviews and discussions.
They also refer to a broad array of industry sources for their secondary research, which typically include; however, not limited to:
- Company SEC filings, annual reports, company websites, broker & financial reports, and investor presentations for competitive scenario and shape of the industry
- Scientific and technical writings for product information and related preemptions
- Regional government and statistical databases for macro analysis
- Authentic news articles and other related releases for market evaluation
- Internal and external proprietary databases, key market indicators, and relevant press releases for market estimates and forecast
Furthermore, the accuracy of the data will be analyzed and validated by conducting additional primaries with various industry experts and KOLs. They also provide robust post-sales support to clients.
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