Dear members of the press
[Report Ocean Press Release] We have conducted a survey to understand the state of the parametric insurance market in 2022.
The industry is growing due to significant technological advancements and user experience improvements in digital insurance.
Survey period: September 15th to December 15th, 2022
Research agency :
Survey contractor: Report Ocean Co., Ltd.
Survey target: The survey was conducted with 890 leaders from organizations of all sizes around the world.
Number of valid responses: (890 people)
Survey method: Telephone survey of 300 people, Internet survey of 590 people Survey Respondents: The survey was conducted across companies based on revenue. [Image 1
Survey results :
Q: How is the parametric insurance market segmented by type? By type, it is classified into natural disaster, special insurance, and other. By type, the natural catastrophe sector will achieve the highest growth during 2022. This is due to continued price increases in commercial insurance and expansion of risk coverage attracting organizations, with many companies implementing parametric solutions in their insurance portfolios.
Q: Which industry has the highest growth in the parametric insurance market? By industry sector, it is classified into Agriculture, Construction, Mining, Manufacturing, Energy & Utilities, Aerospace & Defense, and Others.
Q: What are the key factors driving the parametric insurance market? Main influence factor
Affordable premiums that fit your budget:
Parametric insurance is becoming more popular as it is more
affordable. Due to low insurance premiums, customers purchase parametric insurance to protect their properties against unforeseen financial loss or damage. Plus, we’ll customize it to fit your budget or wrap it around coverage insurance to close coverage gaps. Moreover, SMEs contribute significantly to economic growth in both developing and developed countries. Such companies are the target market for parametric insurance.
This makes it easier for small businesses to claim affordable insurance premiums to protect their businesses from unforeseen financial losses and damages. Businesses are benefiting from the expansion of parametric insurance, which offers continuous innovation and flexibility. Hence, these are the main growth drivers for the parametric insurance market.
Basic risks associated with the severity of the event:
Parametric insurance uses pre-determined parameters to determine risk and is therefore exposed to greater basis risk. The concept of basis risk is very important in insurance. The scenario in which the insurance policy fails to cover the loss event is known as basis risk. Moreover, parametric claims are usually defined according to an index. Therefore, the person who has the insurance is at risk of loss due to non-fulfillment of certain criteria, but will not be compensated. While it is possible that the insured will not be covered at all, it is much more likely that coverage would be expected to be provided but insufficient to cover the loss.
Additionally, it is important that individuals considering taking out parametric insurance have a deep understanding of the nature of a particular risk and what payment triggers adequately cover that risk. Wind speed, storm surge, rainfall, and other natural and man-made factors all contribute to the adjusted risk parameter requirements. Hence, these are the major factors limiting the growth of the parametric insurance market.
Parametric cover is an alternative risk solution offered by insurers and reinsurers that allows organizations to source and transfer risk in non-traditional ways. The solution revolves around measurable metrics, does not necessarily require physical damage to occur, and is based on pre-defined triggers and payment mechanisms. As
climate-related weather risks become increasingly complex and unpredictable, there is a growing demand for such innovative parametric insurance structures.
Parametric insurance, also known as index-based insurance, is gaining traction, especially for weather-related events. Hazard modeling continues to improve, with weather stations and satellites capturing weather-related parameters more accurately. Improved data and models enable parametric coverage as an increasingly efficient, affordable and viable option in the market.
Parametric insurance is also used for a variety of risks other than climate-related weather hazards. Advances in big data analytics, computing power, and modeling processes are building more customized parametric insurance against other specific risks such as cyber, data breaches, and even reputational damage.
Read more: https://bit.ly/3IqRZ41
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Dear members of the press