Parametric Insurance and Artificial Intelligence: A Winning Combination for Climate Risk Management
Parametric insurance, despite its 200-year history, has been slow to gain widespread adoption in the insurance industry. Traditional insurers have often considered it a niche proposition, suitable only for the most challenging risks to insure. However, with the rise of inflation and increased climate volatility, conventional carriers are finding it difficult to underwrite in areas prone to growing losses. As a result, there is a growing interest in exploring alternative risk management solutions, especially those powered by artificial intelligence (AI). Market projections estimate that parametric insurance could reach $29.1 billion by 2032, indicating that this may be the opportune moment for its expansion.
