The Insurance Regulatory and Development Authority of India (Irdai) is seeking government approval to launch a state-backed catastrophe insurance scheme in certain states, according to reports from The Indian Express.
If approved, the project would be launched on a pilot basis, with the aim of offering government-funded catastrophe cover for the poorest sections of society.
India has experienced rising natural disaster losses in recent years, and around 84% of all catastrophes and man-made disasters currently go uninsured.
Flash flooding in Chennai in 2015 represented the largest disaster in the last few years, causing estimated economic losses of $2.2 billion and insured losses of $755 million.
In the following year, India launched the Pradhan Mantri Fasal Bima Yojana (Prime Minister’s Crop Insurance Scheme), a state-backed agricultural insurance scheme designed to protect farmers from the impact of drought and flood.
But elsewhere, the central and state governments continue to react to catastrophe losses post-event by utilising public finances.
Analysts believe that the insurance protection gap in India continues due to factors such as lack of purchasing power, lack of interest in insurance, and ignorance of the availability of relevant coverage.
The government has previously considered proposals for an insurance catastrophe pool, but decisions have stalled over issues related to premiums and how to implement such a scheme across the country.
