Triggering Change: Parametric solutions for climate resilience

As climate and weather risks become more frequent, complex, and unpredictable, parametric insurance solutions are playing an important role in helping organizations address direct and indirect impacts of loss events. The deployment of these tools ranges widely across climatic risks such as tropical cyclones, floods and forest fires, and other natural and man-made hazards such as earthquakes and cyber risk. Parametric insurance has gained traction in the face of difficult underwriting conditions and protection gaps. This has led to a growing focus on the wider resilience benefits that parametric products can offer to society in response to a changing risk landscape.

Triggering Change features perspectives from business leaders across Marsh McLennan who routinely help clients on their climate resilience journey. Building on the successes of a wide range of parametric solutions developed by Marsh’s Parametric Center of Excellence and Guy Carpenter’s Parametric Advisory, Triggering Change focuses on new solutions emerging for businesses, the public sector, and vulnerable communities.


From managing today’s risk to strengthening societal climate resilience

Parametric solutions are very versatile – in principle, any financial loss can be insured under this design as long as there are available datasets that reliably describe financial exposures to physical hazards or any other risk driver. They can extend coverage to high-risk assets and supply chains and help contain the risk of uninsurability. This can be particularly valuable in situations where traditional markets are becoming more expensive, or where underwriters are unable or unwilling to provide coverage. For example, rising losses have recently resulted in particularly challenging renewals in major insurance markets, highlighting the difficulties in reducing significant protection gaps that still exist in many countries.

As the range of applications of parametric solutions continues to expand, one area of particular focus is climate resilience. Parametric insurance can be a crucial tool for adaptation in a warming world and to prepare for long-term climate trends. As highlighted by the Marsh McLennan Flood Risk Index, the threat of flooding is increasing due to climate change and socioeconomic drivers, leaving a growing percentage of global population and assets at risk. Staying Above Water: A Systemic Response to Rising Flood Risk highlights how increasing levels of accumulation and volatility are already discouraging insurers from covering flood risk in some parts of the world, including Florida. Similarly, mounting flood risks in Australia are expected to cause the number of uninsurable properties to grow by 24% over the next 30 years, up from 1 in 25 buildings today. Climate change is also exacerbating tropical cyclone and wildfire risks. Under a 2°C warming scenario, for example, the proportion of category 4 and 5 tropical cyclones is expected to increase by over 10%, while the frequency of extreme wildfires may grow by over 33% by 2050.  

With risk management and transfer in a changing climate becoming increasingly complex, there is a compelling argument for considering the long-term societal resilience benefits that parametric solutions can offer. A number of partnerships between the public and private sectors are emerging in low-income and high-income countries alike, aiming to enhance societal resilience through this type of insurance. These collaborations and increasing investments in research and development have led to a range of innovations, including microinsurance schemes for low-income communities, new products to protect business assets and operations, and solutions offering coverage against risks arising from environmental degradation. Parametric insurance can also be of crucial importance in De-risking and Accelerating the Transition to net zero, by helping organizations manage the risks emerging from their decarbonization journey. However, regulatory challenges remain, as does the need for capacity building and education about the characteristics of parametric insurance.


Parametric solutions for climate perils

The economic losses resulting from natural catastrophes in 2022 amounted to over $270 billion, with only $120 billion covered by insurance. These figures were dominated by perils such as floods, tropical cyclones, droughts, and wildfires which are becoming more frequent and/or severe as a consequence of climate change.

Enhancing societal resilience

Parametric insurance is emerging as an important tool not only for transferring risk but also for promoting broader resilience efforts in the face of climate change. Innovative solutions for the public sector, vulnerable communities, and in the context of nature loss are opening new avenues for managing climate risks.

For primary client requests: Marsh Parametric Center of Excellence

Tom Markovic, Managing Director, Global Head of Parametric Center of Excellence (United States & Global), 


Siegfried King, Lead Business Development Specialist, Parametric Center of Excellence (Latin America and the Caribbean), 

Steve Harry, Senior Business Development Expert, Parametric Center of Excellence (United Kingdom & Ireland), 


Rocio Pereira Fernandez, Senior Leader Client Relationships, Parametric Center of Excellence (Continental Europe, Middle East and Africa), 


Si Si He, Vice President of Alternative Risk Transfer, Parametric Center of Excellence (Asia), 


Andre Kyburz, Alternative Risk Solutions Leader, Parametric Center of Excellence (Pacific),


Ryan Bond, Head of Insurance Innovation for Climate and Sustainability,


Lucia Syder, Vice President, Climate & Sustainability Strategy,

For insurance and reinsurance requests: Guy Carpenter Parametric Advisory

Guillermo Franco, Managing Director and Head of Catastrophe Risk Research,


David Lightfoot, Managing Director, Global Strategic Advisory, Global Accounts and Latin America & Caribbean,