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India Insurance Report - Series II 81

meet their investment requirements that can ideally be bundled into portfolio structures to achieve scale.

The insurance industry and governments need to work together to develop investment opportunities,
refine the business case for resilience, build stronger institutions and create robust policies and regulations
that will appropriately allocate risk among those who can best manage it. Without dedicated and long-
term cooperation to create scalable pathways to low-carbon and climate resilient investment, the SDGs
will not be realized, an outcome that would have significant and far-reaching consequences for all.

10. Going Forward

Advance planning for a financial response instead of relying on post-disaster fund raising should be
seen as a welcome effort by any government. Targeted taxation can have a real impact when linked to
risk reduction and risk transfer activities that private households and firms take. Favourable tax treatment
can encourage people to purchase insurance, expand the size of the insurance market, and enhance the
ability to pool risk, resulting in lower premiums and less government expenditure after a catastrophe.

Promoting insurance coverage for individuals and firms through direct taxation by integrating it
with insurance purchases and combining it with incremental funds mobilized through indirect taxation
can help people get back on their feet. The advantage of insurance is that this does not directly reduce
economic activity today but rather spreads the cost of rebuilding over many decades into the future.

Governments will need to actively look at developing inclusive insurance, both in terms of accessibility
and incentivizing risk reduction. Policy and regulations should focus on expanding access and the use of
innovative solutions around risk reduction for building physical, financial, and institutional resilience
that also underpins the sustainable development agenda.

As risks continue to rise, innovative developments in risk pooling and risk assessments will help
safeguard large segments of uninsured and underinsured populations against uncertainties. All stakeholders
must come together to have a closer look at the risk sharing mechanisms that have traditionally worked
well. By recognizing the role of communities in risk management, such initiatives will further help in
strengthening the financial resilience and stability of communities.

Select bibliography:

ADB and World Bank. 2017. Assessing Financial Protection against Disasters: A Guidance Note on
Conducting a Disaster Risk Finance Diagnostic. Manila and Washington, DC.

Basel Committee on Bank Supervision. 2021. Climate-related risk drivers and their transmission channels.
Basel. BIS

Bank of England. 2019. Climate change: what are the risks to financial stability?

Chandwani, S. 2020. Data Protection and Privacy in the Insurance Industry. Entrepreneur India. 5
March. https://www.entrepreneur.com/article/347212.