Parametric Insurance: How Migrant Workers & Solar Firms Are Benefiting From Trigger-Based Insurance

When temperatures in Noida crossed a certain threshold this summer, a small but significant shift happened quietly in India's insurance industry. A group of migrant workers received insurance payouts, not after filing claims, nor after weeks of back-and-forth with insurers, but automatically. The trigger? The mercury breached the agreed temperature.

These payouts were not part of any traditional health or accident insurance. They were enabled by parametric insurance, a new model that links insurance cover to predefined events, such as rainfall levels, temperature spikes, or wind speed drops. If the event occurs, the claim is paid. No surveys, documentation are needed for the payouts to happen.

Until recently, this type of insurance was limited to niche use cases in India, and barely known outside specialist circles. However, that is starting to change.

The Shift Is Underway

According to data from Policybazaar for Business (PBFB), which tracks the adoption of such products, the past two years have seen a gradual but visible shift in how parametric insurance is being adopted across sectors. The bulk of the interest is still in agriculture, accounting for roughly 50 per cent of total adoption, but renewable energy has been catching up fast, especially in solar and wind sectors.

Says Sajja Praveen Chowdary, director, PBFB, “Parametric insurance is emerging as a vital tool for inclusive climate resilience. We have seen solar projects across Rajasthan and Gujarat adopt irradiance-linked covers that ensure uninterrupted project cashflows even on low-output days. Simultaneously, migrant workers in heatwave zones are now covered through affordable, automated policies that trigger payouts based on temperature thresholds, no claims, no paperwork, just timely support."

In states like Rajasthan, solar developers have started insuring their projects against low irradiance, which is a measure that tells you how much light or radiant energy is hitting a specific area at a given moment.

Wind projects in southern India now routinely buy wind-speed-linked parametric covers. These aren’t regulatory mandates, they are increasingly being demanded by lenders and investors who want downside protection built into climate-sensitive assets.

The appeal is straightforward: payouts are quick, require no paperwork, and are based on external weather data. For companies whose revenue depends on the sun shining or the wind blowing, such insurance metrics are not only needed, but widely accepted.

A New Kind of Safety Net for Workers

But perhaps the most human application of this product so far has been the heat-trigger insurance for migrant workers. In a first-of-its-kind initiative by GoDigit and Jan Sahas, thousands of daily wage earners in Noida, Uttar Pradesh were covered against income loss during periods of extreme heat in May 2025.

This cover is currently being offered in six north Indian cities, including Delhi, Ghaziabad, Noida, Faridabad, Gurgaon, and Lucknow. A group of migrant workers identified by Jan Sahas Foundation, which is also funding the premium on their behalf, are being covered under this parametric insurance plan.

The policy did not need any claim form or hospital records by the workers. If temperatures crossed the agreed threshold, measured through the official IMD data, the payout went through. That is what happened in Noida earlier this year. When the agreed daily maximum temperature crossed 42°C for five consecutive days in May, GoDigit’s policy's trigger condition was met and the insurance payout of Rs 3,000 per worker was paid.

This is where parametric insurance starts to feel less like a technical innovation and more like a necessary rethinking of how coverage should work for people with little to no access to formal protections.

A Market That’s Still Young But Evolving Quickly

Parametric insurance, in its current simplified form, is still relatively new to India. Older versions were bulky, long-term, and expensive, but that is no longer the case. The current crop of products is short-term, modular, and often quite affordable.

According to the data by PBFB, reinsurance availability has improved, too, wherein global reinsurers like Swiss Re, Munich Re, and AXA are now actively backing these products in India, making it easier for insurers to launch them at scale. AI and location-specific data modelling are also playing a role making trigger design smarter and pricing more accurate.

The current structure has been designed to fit with India’s seasonal climate variability:

• Heatwave covers are extended typically during peak summer months May-June.

• Rainfall and drought-linked products are most active between July and September.

• Solar and wind-linked covers are mostly taken between October and February, when weather variability can directly impact renewable energy production.

For now, the total share of parametric insurance in India’s broader insurance market remains small. According to Policybazaar for Business, India’s parametric insurance market is growing at a compound annual rate of 11.30 per cent, which is faster than the global average and is expected to scale meaningfully in the next few years.