INSURANCE

COVERAGE KEY TO
DISASTER
RECOVERY

Making Disaster Insurance mandatory does have

its merits as it will allow the risks to be diversified
across geographical regions within the country and
may also lead to lowering of premiums.

Building a resilience model will require that

insurance be embedded within all disaster
preparedness.

In 2006 when we were working with SHG federations in

Latur and Solapur to setup a Health Mutual model that
Chikungunya struck. It was because of the structures of
health care access that we had invested along with the
community we were working, that they could access the
basic treatment for Chikungunya for Rs.400/- whereas
others had to shell out an average of Rs.8000/- as
medical costs were artificially inflated by private health
care providers.
Thanks to the 24X7 helpline setup by us we could help
members then to navigate the confusion, as to which
care provider to go, and assist them at the time of their
need.

Insurance brings a culture of being aware of the risks and

through the Mutual/Community based route it also builds
bottoms-up preparedness for the risk because people get to
participate in the design and delivery of the same. Mutual
Insurance brings in an attitude of participation and partnership
vis-a-vis a beneficiary attitude in those affected by risks.
However such mutual models need to be complimented by
publicly funded risks pools for the risk coverage to be effective.
A two layer model where certain basic risks that are low cost but
frequent can be taken care by Community Mutual models and
those risks that are high on costs but lower in frequency should
be covered by such mandatory publicly funded risk pools. It will
also allow for those risks that are not traditionally covered

Such two layer models will make beneficiary identification

at the time of disaster response easier and relief and
compensation, better targeted and faster delivered.
A case in point for mutual insurance model is that of
Philippines (prone to typhoons) where CARD MBA a
mutual insurance entity in the aftermath of Typhoon
Haiyan in October 2013, paid claims to almost 300,000
customers affected by the catastrophe within five days of
the event.
The Mutual models always look for reducing or mitigating
the risks and this should be further studied and
experimented upon to build a comprehensive insurance
included - disaster management strategy.

Natural Hazards is determined by nature and cant be avoided, but

definitely the risk and damages can be considerably reduced, if
mitigation and preparedness to different natural hazards is well
planned out. The loss that occurs to Government, Private
Entrepreneurs and Community holds backs checks progress and
overall growth. Recouping from loss is a big challenge and
especially for financial institutions, it is a tedious task. For
example, insurance companies suffered losses of over Rs 4,000
crore in two natural disasters Jammu & Kashmir floods and
cyclone HudHud in Andhra Pradesh and Odisha, in 2014. Year
2015 was no better for Insurance companies, as India experienced
floods across the country between March to December 2015, from
Srinagar in the North to Chennai in South; Mumbai in West to
Meghalaya in the East. Even States such as Rajasthan, Gujarat,
Maharashtra, Madhya Pradesh, West Bengal, Odisha and Manipur
were also affected by floods.

In the backdrop of natural catastrophes, especially

India, where the frequency of Cyclone and Floods
are high

There is need to discuss the insurance issue in the

context of number of catastrophe, specially floods
and the estimated losses running into billions.