Indians are trying out a new insurance to deal with the costs of increasing natural disasters

Over two decades, between 2000 and 2019, India faced the third most number of natural disaster events in the world. Future prospects are grim – with the frequency and intensity of many natural disasters projected to increase, losses and damages will run into billions of US dollars. State coffers may not have the funds to pay.

India is cautiously experimenting with a novel tool to help bridge this finance gap: parametric insurance. Unlike regular insurance schemes which are based on indemnity, or an evaluation of losses post a disaster event, parametric insurance relies on a predetermined set of parameters which, when met, triggers a payout immediately. “There is no survey or lengthy assessment period, which is the main point of difference,” said Pankaj Tomar, India head of Axa Climate, a venture of the AXA Group focussed on creating climate adaptation solutions.

Jashiben Parmar, a 60-year-old construction labourer from Ahmedabad’s Ambawadi municipality, said she could make up for lost wages from heat stress on a day when she received a payout of Rs 400 as part of an ongoing parametric heat insurance scheme for members of the Self Employed Women’s Association. Most parts of north and northwest India are reeling under severe heatwave conditions and record-breaking temperatures....

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