Page 46 - Insurance Times December 2021

TIME TO STEP UP

COVER FOR

NATURAL

CALAMITIES

O ne of the major findings of the recently released have to do their bit, and one of the productive means is to

protect their lives and assets from damages via insurance
All-India Debt and Investment Survey (NSS 77th
cover.
Round) by the National Statistical Office is the
pronounced inequality in the distribution of assets,
both in rural and urban areas, as at June-end 2018. In rural Mature economies are quite advanced in this regard. As a
areas, the top 10 per cent of the households owned over 50 World Bank paper on climate insurance (2017) observes,
per cent of assets, whereas the bottom 50 per cent owned “Insurance solutions can help bolster early action in the face
just 10 per cent. of a disaster, and speed up recovery to restore livelihoods
and rebuild critical infrastructure so that people,
In urban areas, the inequality was more visible than that in communities and economies can rebound.”
rural areas with the top 10 per cent owning 56 per cent of
assets and bottom 50 per cent owning merely 6 per cent. The World Bank, the Global Facility for Disaster Reduction
The Gini coefficient at 0.678 for urban areas exceeded that and Recovery (GFDRR), along with partners, are developing
for rural areas at 0.615. insurance solutions and providing finance to help vulnerable
countries proactively manage disaster risks through a
Frequent natural catastrophes constitute one of the main portfolio of financial instruments. The World Bank Group’s
reasons for exacerbation of inequality in asset distribution in Global Index Insurance Facility provides catastrophic risk
India. This is evident from the median Gini value, which, for transfer solutions and index-based insurance to small farmers,
the coastal States, was higher than that for noncoastal States, micro-entrepreneurs and microfinance institutions in
implying higher inequality in assets distribution in the former developing countries. The International Finance Corporation
(which is relatively more susceptible to rains, floods and is also active in this space. Accelerating this global effort,
cyclones) than the latter, and this was true for rural as well as Germany, the UK, the World Bank and GFDRR, over 30 NGOs
urban areas. and private sector partners have launched a new Global
Partnership called InsuResilience aimed at upscaling climate
In short, natural calamities, sans adequate insurance risk finance and insurance solutions in developing countries.
protection, hit the poor harder in terms of loss of assets and
income than the rich. In India, most of the insurers offer cover for natural calamities
under different policies which are meant for specific objects
India is vulnerable to almost all types of natural catastrophes: of insurance. By and large, the standard Policy for Fire and
floods, tropical cyclones, earthquakes, tsunamis, droughts, Natural Perils issued under Fire Insurance cover natural
landslides and hail. The government, private agencies calamities and specifies their nature. There are policies derived
(including NGOs) and global agencies help mitigate the after- from these basic wordings such as Industrial All Risk Cover. In
effects of natural calamities. However, during such crises, no many other policies, natural calamities are mentioned as
resource can be said as adequate. Therefore, households also specific perils covered.

46 The Insurance Times, December 2021