The Future of Health Parametric Insurance

Parametric insurance is popularly known for its application for events related to weather stated Bahaa Abdul Hussein. When a disaster like a flood or earthquake occurs, parametric insurance ensures immediate payout for those affected. Weather events are not the only risks that can be covered by parametric insurance. Even health insurance can have parametric solutions.

Health insurance and parametric solutions

Let’s first understand how health insurance works under the traditional system:

  • When an insured person is hospitalized for treatment, then they need to get pre-approval for treatment.
  • Where pre-approval is not possible, they need to inform the insurer immediately on admission.
  • Cashless treatment is possible at hospitals under health insurance. Where such facilities are not available, patients need to submit bills later.
  • The treatment/bills are scrutinized by the agency and the bills is approved in full or in part.

The health insurance process can cause frictions and impact customer experience. Delays in processing and complex processes can mar the customer experience. Insurers are striving to try and enhance customer experience while ensuring proper risk coverage.

Parametric solutions can help in ensuring quicker payout that happens almost instantly. Such a system is customer friendly and ensures a great experience for customers. Let’s look at an example to see how it works. The insurer has an app to help customers get payout. As per the parametric norms, pre-defined events are agreed upon along with the amounts to be paid out. Blockchain is used to ensure seamless transactions being carried out.

The doctor needs to confirm that a particular health-related event has occurred. The moment the confirmation is done, the trigger ensure payout is done. Blockchain is used at the backend to process the claim and make the payout. Blockchain ensures the transaction is secure, transparent, and happens instantly.

In the absence of blockchain, there are risks involved. There is the possibility of fraud in transactions. When blockchain is used, this possibility is eliminated. It thus reduces the risk for the insurer. Blockchain facilitates trigger-based transactions making it perfectly suitable for parametric solutions in health insurance.

Another example is of an insurance platform that makes use of blockchain to offer parametric health insurance. It has been found that the platform helps in streamlining the claim process and ensuring quicker payouts. The use of blockchain ensures a higher level of security and transparency.


The popularity of the parametric insurance system is now extended to the health insurance sector. When used in health insurance it helps to enhance customer experience. The blog has been authored by Bahaa Abdul Hussein and has been published by the editorial board of Fintek Diary. For more information, please visit

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