Heatwave Triggers Insurance Payouts for Noida Migrant Workers Under New Climate-Based Policy

Earlier this month, Delhi-NCR saw temperatures soaring above 42° celsius. This rise in mercury levels affected the lives of Delhi NCR residents, especially the migrant workers who often work under the direct heat of the sun.

Temperature in Noida, in fact, soared past 42° celsius for five consecutive days in May. Under these intense heatwaves, a rarely used clause in a new insurance product kicked in. Migrant labourers working outdoors in the heat received direct payouts, without needing to file a claim or submit any paperwork.

The claims came not via traditional insurance products like health or life insurance, but through parametric insurance, a relatively new concept for India’s insurance market. Parametric insurance works very differently from other categories of insurance. Notably there is no surveyor visit, no assessment of injury or loss, and no waiting period. If a specific environmental condition is met, in this case, extreme heat, the payout happens automatically.

What Is Parametric Insurance

Notably the settlement issued for migrant labourers was the first parametric insurance payout settled by Go Digit General Insurance Limited (Digit Insurance) for migrant labourers in Noida as temperature in the city breached its pre-set threshold.

Digit Insurance is currently offering this cover in six north Indian cities, namely Delhi, Noida, Ghaziabad, Gurgaon, Faridabad, and Lucknow - to a group of migrant workers identified by Jan Sahas Foundation, which is also funding the premium on their behalf.

How Does Parametric Insurance Work

Let’s understand how parametric insurance works through the case of Digit insurance’s recent payout. In this particular payout, once the daily maximum temperature crossed 42°C for five consecutive days, the policy's trigger condition was met.

When the temperature crosses a certain threshold (pre-set by the insurer) first tier of payout under the policy, Rs 3,000 per worker was paid. If the extreme heat had persisted for ten consecutive days, a second level payout would have followed.

Each city has its own trigger point based on historical weather data. For example, in some locations the threshold is slightly higher, up to 43.7°C. But the logic remains the same: if the city’s official temperature crosses that line for the required number of days, the payout is automatically activated.

It’s a system built for speed and simplicity, especially important for informal workers who don’t have the time, access, or support to navigate conventional insurance claim processes.

Moreover, other than the heat-triggered payout, the cover also includes a hospital cash allowance of up to Rs 5,000 for any accidental injury or illness during the policy period, even if there is no heatwave. This part of the policy does not require any weather threshold to be met; it supports workers who may fall ill or get injured regardless of temperature.

Says Amitabh Dewan, Head of Large Risks, Policybazaar for Business, "Unlike traditional indemnity-based insurance, which requires detailed loss assessments and documentation, parametric cover eliminates claim friction through pre-defined strike and exit parameters and agreed data sources, ensuring quick, objective, and transparent compensation."

He adds that over the years, this model has gained traction in sectors like renewable energy, where variables such as solar irradiation or wind availability are insured.

"Now, its use is expanding into critical but previously uninsured or underserved areas, such as logistics, cattle farming, rural credit, and vulnerable worker groups like gig and migrant labourers. This shift reflects both the growing climate risk and the need for innovative, inclusive protection tools that can provide real-time support to those who need it most," Dewan states.

Why Parametric Insurance Is Needed

The data noted by Digit Insurance states that in 2024 alone, India reported over 67,000 suspected cases of heatstroke and at least 374 heat-related deaths.

The climate-related risks are growing, among them the unpredictable - often extreme - weather conditions may dent the typical work routine of people. However for daily wage earners, who work physically demanding jobs done under the sun, these numbers are more than just simple statistics.

Parametric insurance is built specifically for climate-related financial shocks - things like extreme heat, floods, or high air pollution. Where traditional insurance requires a proof of loss, parametric insurance pays out based on data and historical trends, in this case, temperature records from recognised weather stations.

This simplicity of claim settlement allows for faster relief when people are affected by environmental events that might not cause measurable damage to property or health, but still disrupt lives and incomes.

The policy, developed by Digit Insurance in partnership with reinsurance broker K.M. Dastur and Jan Sahas Foundation, is part of a growing push to find scalable ways to protect the vulnerable from the growing risks of climate extremes. The same partners previously launched a similar insurance product based on air quality index (AQI) levels for workers in Delhi.

While it is still early days, this pilot in Noida offers a glimpse into what climate-adaptive social protection could look like, where something as simple as a temperature reading can become the basis for immediate financial relief.