MUMBAI: A report by State Bank of India has called for a ‘National Disaster Pool’ to make good the economic loss arising out of natural calamities, which are increasing in number. The report has called upon the regulators and the government to come out with standardised products to plug the protection gap in each segment.
According to the report, India recorded 756 instances of natural disasters (such as landslides, storms, earthquakes, floods, and droughts) since 1900 with 402 events occurring during 1900-2000 and 354 during 2001-2021. “This indicates the preponderance of tail events off late. Since 2001, a total of 100 crore people have been impacted and nearly 83,000 people have lost lives due to these disasters,” the report said.
Even as the intensity of weather events increase and the economic losses soar, the protection gap continues to impoverish households and destroy small businesses. “In India, only around 8% of the total losses are covered. So, there is around 92% protection gap during the period 1991 to 2021. So, early intervention is needed to close the protection gap, which are in all lines (life & non-life) of insurance,” the report said.
Assessing the damage caused by the 2020 floods, the report said that economic losses were to the tune of Rs 52,500 crore, but insurance was only 11% of these. If the government had provided insurance, the premium for the sum assured of Rs 60,000 crore would have been in the range of Rs 13,000-15,000 crore.
Besides the intensity of weather events, changing trends also expose the economy to large losses. For instance, weather events can completely destroy the functionality of solar panels. In 2019, a single hailstorm generated a $70-million insurance payout for a Texas solar farm.
According to the report, India recorded 756 instances of natural disasters (such as landslides, storms, earthquakes, floods, and droughts) since 1900 with 402 events occurring during 1900-2000 and 354 during 2001-2021. “This indicates the preponderance of tail events off late. Since 2001, a total of 100 crore people have been impacted and nearly 83,000 people have lost lives due to these disasters,” the report said.
Even as the intensity of weather events increase and the economic losses soar, the protection gap continues to impoverish households and destroy small businesses. “In India, only around 8% of the total losses are covered. So, there is around 92% protection gap during the period 1991 to 2021. So, early intervention is needed to close the protection gap, which are in all lines (life & non-life) of insurance,” the report said.
Assessing the damage caused by the 2020 floods, the report said that economic losses were to the tune of Rs 52,500 crore, but insurance was only 11% of these. If the government had provided insurance, the premium for the sum assured of Rs 60,000 crore would have been in the range of Rs 13,000-15,000 crore.
Besides the intensity of weather events, changing trends also expose the economy to large losses. For instance, weather events can completely destroy the functionality of solar panels. In 2019, a single hailstorm generated a $70-million insurance payout for a Texas solar farm.
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