In Ahmedabad, one of India’s hottest cities, a parametric insurance scheme is paying out automatically to informal women workers when temperatures cross dangerous thresholds.

Clothes seller Lata Solanki, 42, is among more than 30,000 women enrolled in 2026, receiving cash when the heat makes work impossible. The scheme, run by the Mahila Housing Trust and insurer Go Digit, requires no damage assessment and no claims process.

What is parametric heat insurance and how does it work in India?

Parametric insurance pays out automatically when a pre-set trigger is breached, rather than requiring individuals to prove losses. In Solanki’s case, the trigger is two consecutive days at or above a temperature threshold. No assessment is needed. When the threshold is met, all enrolled women receive a fixed cash payment at the end of the heat season in September.

The scheme began in 2024 with 26,000 women across the state of Gujarat, with premiums of 354 rupees covered by the Climate Resilience for All initiative. In 2025, no payments were made because temperatures did not reach the threshold.

For 2026, the trigger has been revised down to 42.74 degrees Celsius, and payouts will range from 850 to 2,000 rupees depending on how high temperatures climb. Higher temperatures trigger higher payments, but the amount is a one-off, not cumulative.

Why do informal workers in India need heat insurance?

India lost an estimated 247 billion hours of labour to extreme heat in 2024, equivalent to nearly $194 billion in economic losses, according to the Lancet Countdown research group. Agriculture and construction bore the brunt, but informal urban workers like Solanki face the same exposure with little protection. Climate change is increasing the number of extreme heat days India experiences each year.

Before joining the scheme, Solanki faced a stark choice during heatwaves: keep working and risk her health, or stay home and lose income. In 2023, she worked through a heatwave and spent 20 days sick at home, losing at least 2,000 rupees in earnings. The following year, she received 750 rupees from the scheme, more than the cost of her premium, in a country where the average monthly rural household income is around 10,000 rupees.

“At least we feel there is some support,” she told AFP. “Because of the heat, the fan runs day and night. The bill goes up.”

Who else is covered by parametric insurance schemes in India?

The model extends beyond Ahmedabad. Since 2024, the government of Nagaland in northeastern India has insured its entire population against economic losses from heavy rainfall under a parametric model. India’s federal government is also examining how to extend parametric schemes more widely to “supplement insurance mechanisms and reinforce protection to the people.”

Go Digit appointed actuary Adarsh Agarwal said his company has covered more than 50,000 people since it began offering parametric insurance two years ago. Demand has grown, he told AFP, with “more knowledge and more curiosity” about the product. Go Digit now offers both heat and air-quality parametric schemes.

What are the limitations of parametric heat insurance?

Payouts tend to be small relative to actual losses, and the effectiveness of the model depends on how accurately trigger thresholds reflect conditions on the ground.

Aniruddha Bhattacharjee, senior researcher for climate resilience at Climate Trends, said parametric schemes can be “faster and more transparent” than traditional insurance. But he cautioned that models are largely built on historical weather data, which may not capture the full range of future heat events.

Mahila Housing Trust program manager Nital Rahul Patel said the scheme grew out of direct conversations with women workers in Ahmedabad.

“They would say it is very hot every year,” she said. “But when we broke down their expenses, we realized incomes were falling by 2,000 to 2,500 rupees over four months of summer.” Seamstress Rakhi Gulshan Singh, 30, signed up even though she works indoors. “When I run the sewing machine, it becomes even hotter,” she said. “It is small, but it gives some relief.”

India’s government weather forecasters are predicting above-average temperatures in May and June. Solanki is already watching the forecast. “Maybe we will get a payout,” she said. Either way, she plans to stay enrolled, “even if it means paying the premium from our pockets.”