Kathmandu. The expansion of parametric insurance in neighboring India has started gaining momentum.
With floods, heat waves and growing solar power shortages, India’s interest in parametric insurance is increasing in sectors such as agriculture, renewable energy and informal labour, according to PolicyBazaar for Business. India’s parametric insurance market is growing at a rapid pace of 11.3 per cent annually by 2028. However, it is still early.
Parametric insurance is becoming a key tool in India’s climate risk strategy. “The use of parametric insurance in India is low, but the demand has been increasing in recent times,” the policy market report said, adding that 50 per cent of the people in the agriculture sector benefit from it, mainly due to drought and excessive rainfall. ’
The renewable energy sector in India accounts for 40 per cent of this insurance. While the remaining 10 percent include coverage for heat strokes, logistics and flight delays.
Recent climate change events in Rajasthan, Gujarat, Himachal Pradesh and coastal Karnataka have increased real-world payments. The new products are short-term, simple and supported by reinsurers such as Swiss Re and Munich Re.
The use of AI is also improving trigger design and pricing. Seasonal variations are emerging. These include heat-related insurance cover in May-June, rain in July-September, and solar or wind from October to February.
Globally, the parametric insurance market was valued at $15.9 billion in 2023 and is projected to reach $34.6 billion by 2032.
