In India, the government and insurance companies are now working on a new scheme, which aims to provide fast financial assistance to deal with the floods, heat -like heat and other natural disasters across the country. A special type of insurance model will be adopted in this scheme, which is called parametric insurance. This means that as soon as a particular limit related to the weather, such as strong rains, temperature or wind speed goes above a fixed limit, the insured will immediately get the money. In this way, payment will be made without assessing the loss and help will reach soon.
Why parametric insurance is important for India
A report by Reuters stated that this model of parametric insurance can be very important for India as the country is at the highest risk for climate change and extreme weather events. Every year, millions of people are harmed by incidents like flood, drought, and storm. Currently, the government sends funds to different states for disaster management, but with this new model, insurance companies will be able to provide more efficient and fast help by taking risks. With this, the expenditure of the government will also be controlled.
How will this insurance work?
Reuters reported that the advantage of parametric insurance is that there is no need to wait for months after finding out the loss in detail. As soon as the weather criteria (such as rain volume or temperature) crosses the fixed limit, the insurance company immediately pays the fixed amount. People affected by this can get quick relief and compensate for their loss. The special thing is that this insurance can also be given in areas where traditional insurance is not available.
Government officials and insurance companies are discussing this scheme and for this, the Ministry of Finance, Disaster Management Agency and India’s Insurance Regulatory IRDAI are also included. At present, no final proposal has come, but the discussion has progressed a lot. The government is also wondering where the additional fund for insurance premium will come from. For this, small charges can be levied in utility bills or existing disaster relief funds can be used.
Experimental tests are being done in country and states
Reuters said in their report that some states have already started testing such schemes. For example, some people were paid directly to the temperature above 40 degrees Celsius during the summer last year in Rajasthan, Gujarat and Maharashtra, while Nagaland paid more than 1 lakh dollars after heavy rains in May. The milk union of Kerala has also launched a scheme covering the damage caused by heat for farmers.
After all, why is this scheme important?
According to the Global Climate Risk Risk 2025, India is in the top countries in the world in terms of climate risk. In the last three decades, more than 400 serious natural disasters have occurred in India, including more than 80,000 deaths and heavy economic losses. In such a situation, a sharp, transparent and effective insurance scheme can prove to be a big relief for the country. This scheme can become a strong medium to help small farmers, local traders and affected families.