Nagaland renews parametric insurance, with SBI General, Munich Re & GIC Re support
Nagaland, a mountainous state in northeast India, remains the first state in India to buy parametric disaster insurance to protect itself and its critical infrastructure against the impacts of natural catastrophes.
State focused parametric insurance solutions have been adopted in some other countries, often as pilot schemes to try out a new disaster risk financing arrangement before a broader roll-out.
In this case, Nagaland has signed a memorandum of understanding (MoU) with Indian insurer SBI General, who will provide the parametric solution.
Reinsurance for the parametric cover has been provided by Munich Re and GIC Re.
It is a renewal of a scheme first entered into back in 2020, when Swiss Re collaborated with Indian primary insurance carrier Tata AIG General Insurance Company Limited to provide a parametric monsoon coverage for Nagaland.
SBI General has developed what it calls a Disaster Risk Transfer Parametric Insurance Solution (DRTPIS) Product, that can provide broad state-wide protection and respond to catastrophes rapidly with fast payouts.
The parametric insurance solution is being adopted by the Nagaland State Disaster Management Authority (NSDMA), as it looks to continue to enhance the State’s protection against natural catastrophes.
The state sees the DRTPIS product “revolutionising” its disaster risk management approach, while SBI General said it will provide Nagaland “swift financial aid after natural calamities.”
Neiphiu Rio, Chief Minister of Nagaland, commented, “The State Government and SBI General signed a Memorandum of Understanding (MoU) for a Disaster Risk Transfer Parametric Insurance Solution (DRTPS), making Nagaland the first Indian state to implement this disaster management insurance.
“A parametric multi-year risk transfer solution, it will aid in protecting the State’s critical infrastructure and reduce economic losses due to disaster.”
The agreement with SBI General was formalised recently and will run for three years, with the state government set to bear the cost of premiums over the three-year term of the state-wide parametric disaster insurance protection.
Nagaland is particularly exposed to risks such as flooding, landslides and droughts and the insurance is being designed to cover all three this time, reports suggest.
It’s seen as an important step for the state of Nagaland, but also for India, as the country looks to better protect its economy and population against natural disasters and secure financing that can efficiently and swiftly pay to support recovery and rebuilding costs.
