The increasing incidence of extreme weather events in Brazil, particularly floods in the metropolitan region of Rio de Janeiro, has led to a significant rise in economic losses associated with natural disasters. This study highlights the important "protection gap" between total losses and those effectively insured, emphasizing the challenges in expanding insurance coverage, including barriers such as high costs, contract complexity, and risk perception. It proposes the implementation of an innovative parametric insurance system—engaging both the public and private sectors—as a strategy to reduce the vulnerability of at-risk communities, promote climate resilience, and enable more efficient recovery in the face of climate change. The study also underscores the need for inclusive dialogue and the mobilization of resources to overcome obstacles in the advancement of climate finance and insurance policies within the Brazilian context.