The Latest Parametric Insurance Industry Statistics Explained
By 2029, the global parametric insurance market size is projected to reach USD 8.02 billion.
The statistic indicates that the global parametric insurance market is expected to grow to a size of USD 8.02 billion by the year 2029. Parametric insurance is a type of insurance that pays out a set amount based on predefined parameters, such as wind speed or seismic activity, rather than actual losses incurred. The projected market size suggests an increasing adoption and awareness of parametric insurance products worldwide over the next decade, likely driven by factors such as the need for innovative risk management solutions in response to growing frequency and severity of natural disasters, as well as advancements in technology enabling better data collection and analysis for risk assessment. This growth projection reflects the expanding role of parametric insurance in providing efficient and timely financial protection against various risks for businesses and individuals globally.
As of 2020, the worldwide premium earned from parametric insurance was USD 1.50-2 billion.
The statistic indicates that in the year 2020, the total worldwide premium earned from parametric insurance policies amounted to an estimated range of USD 1.50-2 billion. Parametric insurance is a type of insurance that pays out a predetermined amount based on specific, measurable events rather than actual losses incurred by the policyholder. This statistic suggests that parametric insurance has been gaining traction globally, with increasing premiums being collected as more individuals and businesses seek innovative risk management solutions. The growth of parametric insurance may be attributed to its ability to provide swift payouts and coverage for events such as natural disasters or other specified triggers, offering a quick and efficient means of financial protection.
By 2028, the Asia Pacific parametric insurance market is projected to grow at a CAGR of 25.31%.
This statistic indicates that the parametric insurance market in the Asia Pacific region is forecasted to experience significant growth over the next eight years, specifically at a compound annual growth rate (CAGR) of 25.31%. Parametric insurance is a type of insurance that pays out a predetermined amount based on an event with specific parameters, such as a natural disaster or other predefined triggers. The projected growth rate suggests a high level of potential demand for parametric insurance products in the Asia Pacific region, likely driven by factors such as increasing awareness of the need for more efficient risk management solutions and the growing frequency of extreme weather events and other climate-related risks in the region. This forecast underscores the expanding opportunities for insurers and reinsurers to tap into the region’s market and meet the evolving needs of businesses and individuals seeking innovative risk transfer mechanisms.
By 2026, the global property line parametric insurance market is estimated to be valued at USD 4.3 billion.
The statistic indicates that experts predict the global property line parametric insurance market will reach a value of USD 4.3 billion by the year 2026. This forecast suggests a significant growth trajectory for the industry, reflecting an increasing demand for parametric insurance products aimed at protecting against specific risks related to property damage. Factors such as rising natural disasters, climate change impacts, and a growing awareness of the benefits of parametric insurance in providing quicker payouts and streamlining claims processes are likely driving this anticipated market growth. The projected value of USD 4.3 billion underscores the potential economic scale and importance of parametric insurance in the global insurance landscape over the coming years.
Parametric insurance currently accounts for just 1% to 3% of global catastrophe risk capital, despite its room for growth.
The statistic indicates that parametric insurance, a type of insurance that pays out based on pre-defined parameters such as earthquake magnitude or hurricane intensity rather than actual losses, is currently underutilized in the global catastrophe risk market. Despite its potential benefits and room for growth, only 1% to 3% of the total capital allocated to managing catastrophe risks is currently invested in parametric insurance products. This suggests that there is still significant opportunity for expansion and uptake of parametric insurance, as it offers a more efficient and transparent way of mitigating risks associated with natural disasters and other catastrophic events compared to traditional insurance policies. Increased awareness, education, and innovative product development may be needed to further popularize and expand the use of parametric insurance in the future.
In 2019, the World Bank issued a USD 1.36 billion cat bond for the Philippines, the largest ever government-sponsored insurance policy.
The statistic highlights a significant financial transaction that took place in 2019, where the World Bank issued a catastrophe bond (cat bond) valued at USD 1.36 billion for the Philippines. This cat bond represents the world’s largest government-sponsored insurance policy to date, aimed at providing financial protection to the Philippines in the event of natural disasters such as typhoons, earthquakes, or other catastrophic events. The issuance of this cat bond demonstrates a proactive approach by the Philippines government and the World Bank to mitigate the financial risks associated with natural disasters, ensuring swift access to much-needed funds for disaster response and recovery efforts.
In 2017, the Worldwide insurance recovery from hurricanes was $0.8 billion out of a total economic loss of $215 billion.
The statistic indicates that in 2017, the global insurance industry paid out $0.8 billion in claims for damages caused by hurricanes, out of a total economic loss of $215 billion resulting from these natural disasters. This suggests that only a small fraction (less than 1%) of the total economic losses due to hurricanes was covered by insurance. The significant gap between the insured and uninsured losses highlights the need for increased insurance coverage, disaster preparedness, and risk mitigation strategies to better protect individuals, businesses, and communities from the financial impact of natural disasters like hurricanes.
Parametric insurance covered losses up to USD 1.36 billion for the Caribbean nations in just over a decade of operation as of 2020.
The statistic indicates that parametric insurance policies have provided coverage for losses totaling up to USD 1.36 billion for the Caribbean nations over a period slightly exceeding a decade, as of the year 2020. Parametric insurance is a type of insurance that pays out a predetermined amount based on the occurrence of a predefined event, such as a natural disaster or extreme weather event, rather than focusing on actual losses incurred. This statistic highlights the significant financial protection that parametric insurance has offered to Caribbean nations, helping them manage the financial impacts of various perils and disasters.
Parametric insurance policies deliver payments within 14 to 21 days, helping to ease disaster recovery.
The statistic indicates that parametric insurance policies provide swift payouts within a relatively short timeframe of 14 to 21 days after a covered event occurs, which ultimately aids in facilitating speedy disaster recovery efforts. Parametric insurance differs from traditional insurance in that payouts are triggered by predefined indices or parameters, such as a specific level of earthquake magnitude or wind speed, rather than requiring complex claims investigations. This rapid response time allows policyholders to quickly access financial assistance to begin rebuilding and repairing after a disaster, enabling more efficient recovery processes and reducing the financial strain on affected individuals or businesses.
The UK’s parametric insurance market alone is predicted to grow by 16% annually.
This statistic indicates that the parametric insurance market in the UK is expected to experience consistent and substantial growth, with a projected annual increase of 16%. Parametric insurance is a type of insurance that pays out a predetermined amount based on the occurrence of a specific trigger event, such as natural disasters or extreme weather conditions, rather than relying on traditional claims assessment processes. The predicted growth rate suggests a rising demand for this form of insurance in the UK, likely driven by a growing awareness of climate-related risks and the need for more efficient and transparent insurance solutions. This upward trend could present opportunities for insurance providers in the UK to develop innovative parametric products and better cater to the evolving needs of customers looking for comprehensive risk protection.
Market investors are allocating an excess of USD 200 Billion to parametric insurance globally.
The statistic that market investors are allocating an excess of USD 200 billion to parametric insurance globally suggests a significant increase in the use of this type of insurance within the investment landscape. Parametric insurance is a type of insurance that pays out a preset amount when specific conditions are met, such as a natural disaster occurring. This influx of investment indicates growing confidence in the effectiveness and potential returns of parametric insurance products. It also reflects a strategic shift towards innovative risk management solutions that provide more predictable outcomes compared to traditional insurance products. This trend highlights a recognition among market investors of the value and importance of managing risks proactively in today’s volatile economic environment.
By 2027, the CAGR for the Global Parametric Insurance Market is expected to be 26.4%.
The statistic “By 2027, the CAGR for the Global Parametric Insurance Market is expected to be 26.4%” indicates that the Compound Annual Growth Rate (CAGR) for the global parametric insurance market from the present year to 2027 is projected to be 26.4%. This suggests a rapid growth trajectory for the parametric insurance industry, with an average annual growth rate of 26.4% over the specified period. The CAGR is a useful metric for understanding the overall growth trend of a market or investment, providing a single figure that represents the mean annual growth rate over a specified time frame. In this case, a CAGR of 26.4% indicates a strong potential for expansion and development within the global parametric insurance sector by 2027.
Approximately 70% of economic losses from natural disasters remain uninsured globally. Parametric insurance solutions can help to close the gap.
The statistic highlights a significant gap in addressing economic losses resulting from natural disasters, with around 70% of these losses going uninsured on a global scale. This lack of insurance coverage leaves individuals, businesses, and communities vulnerable to the financial impacts of disasters such as floods, hurricanes, and earthquakes. Parametric insurance solutions offer an innovative approach to closing this gap by providing predefined payouts based on specific measurable parameters, such as wind speed or rainfall levels, rather than requiring complex claims processes. By utilizing parametric insurance, more individuals and businesses can access coverage for natural disaster losses, enabling them to recover and rebuild more effectively in the aftermath of such events.
The U.S. with 39.1% holds the largest share in the parametric insurance market.
The statistic indicates that the United States currently has the highest share in the parametric insurance market compared to other countries, with a market share of 39.1%. Parametric insurance is a type of insurance that pays out a pre-agreed amount based on the occurrence of a specific event or trigger, such as a natural disaster or financial loss, rather than traditional insurance that requires proof of actual losses. The high percentage held by the U.S. suggests that the country has a significant presence and influence in this particular insurance sector, potentially due to factors such as the size and diversity of its economy, as well as the prevalence of catastrophic events that can be covered by parametric insurance products.
The percentage of GDP protected by parametric (and traditional) cat bonds on average is only 1% worldwide.
This statistic indicates that globally, only approximately 1% of the gross domestic product (GDP) is covered by parametric and traditional catastrophe (cat) bonds. Cat bonds are financial instruments designed to provide insurance coverage against specific catastrophic events such as natural disasters. The low percentage suggests that a small portion of GDP across countries is protected against the financial impact of such events through these instruments. This may indicate a potential gap in risk management strategies and financial protection mechanisms against catastrophes on a global scale, highlighting the need for further efforts to diversify and enhance disaster risk financing tools to better shield economies from unforeseen catastrophic events.
The penetration of parametric insurance products into non-insurance sectors, such as agriculture, is expected to grow sharply over the next five years.
The statistic suggests that parametric insurance products, which are based on predefined parameters (such as rainfall levels or crop yield) rather than actual losses, are anticipated to gain significant traction in industries outside of traditional insurance, particularly in agriculture, within the next five years. This growth indicates a shift towards innovative risk management solutions in sectors that have historically been underinsured or faced challenges in obtaining traditional insurance coverage. By leveraging parametric insurance, businesses in agriculture and other non-insurance sectors can better protect themselves against specific, easily measurable risks, leading to increased resilience and stability in the face of unpredictable events.
The production of cyclone parametric insurance has grown in Australia by 12% from 2018-2021.
The statistic indicates that the production of cyclone parametric insurance in Australia has increased by 12% between the years 2018 and 2021. This growth suggests a rising demand for insurance products tailored specifically to protect against cyclone-related risks in the Australian market. The increase in production could be attributed to various factors such as escalating awareness of the potential impact of cyclones, changing weather patterns leading to an increased frequency or severity of cyclones, and a greater emphasis on risk management and financial protection. This growth in cyclone parametric insurance production reflects the evolving needs of individuals and businesses in Australia to safeguard themselves against the financial consequences of cyclone events.
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