Parametric insurance is a fast-growing industry thanks to the benefits it offers stated Bahaa Abdul Hussein. The global market for the industry is expanding. There are many opportunities available that players can capitalize on. At the same time, there are many challenges to be overcome. We explore all these.

Parametric Insurance global market

Parametric insurance is innovative since it uses the concept of event-based triggers to make insurance payout. This feature is a huge benefit since it is beneficial for customers. This has made parametric insurance popular worldwide. As on the date, the value of the parametric insurance market is $12.8 billion and is growing. It is expected that this figure would increase to $29.3 billion by 2031.

The increasing awareness of parametric insurance has ensured there is a lot of potential for its growth. Climate change is a serious problem and affects countries across the world. Weather-related events can cause serious risks. Parametric insurance helps insured get payouts quickly helping them cope with uncertainty.

Opportunities and Challenges

Many opportunities present themselves before the parametric insurance industry. These opportunities will help them be a part of the growth story:

  • Increased climate change and the associated risks have made people understand the need for parametric insurance thanks to its benefits.
  • With innovations in every field, parametric insurance is an innovation that offers flexibility in insurance. This would help insurers while marketing products.
  • Technologies like Artificial intelligence, machine learning, and data analytics can be used effectively by parametric insurance providers. Growth in these areas will help them increase efficiency.
  • Apart from the property and agriculture sectors, there are opportunities in other areas too. The healthcare sector is one such area. This opens up more prospects.
  • Government is focused on managing disasters and dealing with climate change. This is a great opportunity for parametric insurance providers. Further, government is also getting parametric insurance to help cities and citizens recover from disasters. This opens up huge opportunities for growth.

While there are many opportunities, there are also challenges to be overcome.

  • The biggest challenge is the lack of awareness. It is important to educate consumers about parametric insurance and how it works.
  • Risk models need to be accurate to ensure consumers get the best price while insurers are not exposed to high risk.
  • Insurers must implement technologies like AI, ML, blockchain, etc. that call for investments.

The industry needs to ensure these opportunities are exploited. At the same time, they must be ready to deal with challenges so they can get a chunk of the fast-growing global market. Thank you for your interest in Bahaa Abdul Hussein blogs. For more information, please visit www.bahaaabdulhussein.com.