The Indian government is likely to reassess the need to establish a natural catastrophe insurance pool due to mounting economic losses from a series of such events in India over the past three years.
Sources say the government may revisit a pool-like arrangement to offer natural catastrophe insurance covers that would protect property and dwellings from floods, earthquakes, cyclones, landslides, among others, reported Money Control.
Deliberations on a Nat CAT pool have been ongoing for almost five years now. However, due to a lack of consensus on the structure of the pool, it has not yet been set up.
“After Cyclone Amphan, consensus is emerging that there should be cover for dwellings and physical belongings during a natural catastrophe. Traditional insurance products may not be suitable to cover events of such a large scale,” said an official.
Cyclone Amphan caused widespread damage in East India and Bangladesh in May. It was the strongest tropical cyclone to strike the Ganges Delta since 2007, causing economic losses estimated at over $13bn. Insured losses could hit INR4bn ($53m), as per initial estimates.
In the last five years, losses due to catastrophes have led to insured losses of almost INR270bn ($3.6bn).