Indian lawmakers and insurance companies are discussing the possibility of building out a new and unconventional nationwide insurance program. It would create simple, automatic payouts to residents after extreme weather events.
Reuters reported that the "climate-linked insurance program" would provide benefits to those impacted by extreme events like heatwaves and floods.
As discussed, the plan would be a parametric insurance program. This means companies would pay out a fixed, predetermined amount to policyholders impacted by these weather events.
"We've seen the frequency and severity of adverse climate events go up, and based on that, this discussion with the government has also started," Ramaswamy Narayanan, a former insurance executive who was a part of those initial conversations, told Reuters.
Officials reportedly prefer a parametric insurance model because it allows for quick payouts. Under traditional insurance models, it can take years to assess damage and determine the proper payout for each policyholder.
"These conversations are gathering pace, and every insurance company is attentive to opportunities," an insurance executive told Reuters.
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Parametric insurance policies aren't yet common, but they've become more frequent in conjunction with rising global temperatures. One U.S. company has started offering such plans for businesses impacted by grid failures that occur from extreme weather.
The heat-trapping pollution that has caused record-breaking global temperatures also causes weather events like floods, droughts, and heatwaves to happen more frequently and severely.
Perhaps no country sees the effects of this more than India.
According to IQAir, India was home to six of the 10 cities with the most polluted air worldwide in 2024. That pollution has led to some devastating weather events.
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Yes — everywhere 👏 A Yale study from earlier this year asked people in India if they had experienced an extreme weather event in the past 12 months. The study found that more than half of the people surveyed had experienced heat waves, water pollution, droughts, and severe air pollution.
Reuters also reported that, between 1993 and 2022, India experienced more than 400 extreme weather events. These caused at least 80,000 deaths and $180 billion in damage.
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