Context:
Amid increasing frequency of extreme weather events, parametric insurance—a product that pays out automatically based on predefined environmental thresholds—is gaining traction in India. While still nascent, insurers expect its growth to accelerate due to climate change’s growing impact on livelihoods and public health.
What is Parametric Insurance?
Parametric insurance provides automatic payouts when predefined parameters (such as temperature, rainfall, wind speed, or seismic magnitude) are met or exceeded.
Unlike traditional insurance, it does not require claim filing or damage assessment, ensuring quick and transparent disbursement.
Key Features:
- Insured Events: Heatwaves, excessive rainfall, earthquakes, tropical cyclones, and floods
- Trigger Parameters:
- Heat Index (temperature threshold)
- Rainfall (in mm/day or cumulative over days)
- Wind speed, water depth, or Richter scale magnitude
- Policy Benefits:
- Daily payout: ₹500–₹2,000 depending on severity and policy
- Hospitalization allowance: Up to â‚ą5,000 for weather-related injuries or illness
- Payouts triggered automatically using IMD (India Meteorological Department) data
