Parametric insurance sees 12.6% CAGR through 2034

China is expected to be one of the fastest-growing parametric insurance markets.

The global parametric insurance market was valued at $16.2b in 2024 and is projected to grow at a compound annual growth rate (CAGR) of 12.6% from 2025 to 2034, driven by climate change, technological advancements, and evolving risk management strategies in the insurance industry.

Parametric insurance, which pays claims based on predefined event parameters rather than traditional loss assessments, is gaining traction as natural catastrophes become more frequent and unpredictable, according to Global Market Insights. 

In 2024, the natural catastrophe segment accounted for approximately 70% of the global market and is expected to maintain a growth rate of over 12% during the forecast period.

Corporate clients represented the largest end-user group, with a 50% market share, also projected to grow at a CAGR exceeding 12%.

The integration of cloud, on-premises, and hybrid systems as part of insurers' digital transformation is also facilitating the adoption of parametric models. 

As of December 2022, global IoT endpoints rose by 18% year-on-year to reach 14.3 billion, providing a data-rich environment for real-time risk assessment and claims automation.

China is expected to be one of the fastest-growing parametric insurance markets between 2025 and 2034. 

The country’s exposure to climate-related events such as floods, droughts, and typhoons, alongside strong government support for disaster risk financing, is accelerating adoption. 

In addition to crop and weather-related parametric products, Chinese insurers are introducing environmental engineering coverage to help businesses address financial losses linked to marine and ecological degradation.