NDMA and DoFS Emphasise Importance of Disaster Risk Insurance at Recent Workshop

Principal Secretary to the Prime Minister, PK Mishra, emphasised the need for comprehensive insurance coverage as part of the Prime Minister's 10-point agenda for Disaster Risk Reduction, introduced in 2016. During a workshop titled "Why Disaster Risk Insurance Matters," organised by the National Disaster Management Authority (NDMA) and the Department of Financial Services (DoFS), Mishra highlighted the challenges and possibilities in designing such insurance products.

Representative image

Union Home Secretary Govind Mohan underscored the necessity of incorporating insurance into disaster management strategies. He noted that disasters are becoming more frequent and intense, putting traditional management models under pressure. "Financial stress, infrastructure damage and loss of livelihoods persist long after the disaster has passed. Hence, disaster risk insurance can provide a much-needed buffer," he stated.

Insurance Integration in Disaster Management

Mishra pointed out that understanding co-variability is crucial due to India's diverse hazards across regions. He cited the PM Fasal Bima Yojana as a successful example despite initial design challenges, such as lack of pre-verification means for insured assets like crops. He stressed that financial viability of differentiated products is vital for sustainability in this sector.

Mohan praised the joint efforts of DoFS and NDMA in exploring innovative solutions like parametric insurance, catastrophe bonds, and risk pools. He urged states and Union territories to operationalise disaster insurance programmes. Four sessions were held to discuss global and Indian risk pool examples, integration of Nat Cat Bonds, parametric insurance product design, and disaster database requirements.

Technological Advancements and Industry Suggestions

Mishra advised the industry to leverage technology to mitigate moral hazards and adverse selection. He also suggested spreading risk not only across regions but over time to ensure financial stability. The workshop featured speakers such as NDMA member Rajendra Singh, advisor Safi Ahsan Rizvi, members Dr Krishna S Vatsa and Lt Gen Syed Ata Hasnain, along with DoFS Additional Secretary MP Tangirala.

The discussions highlighted the importance of creating a robust framework for disaster risk insurance in India. By integrating innovative financial instruments and leveraging technology, stakeholders aim to enhance resilience against disasters. The collaborative efforts between government bodies and industry experts are crucial in achieving these goals.