The Indian insurance sector has suffered heavy losses due to the increasing incidence of cyclonic storms and natural calamities. It is expected to increase further in the coming times. This has been claimed in the recently released IPCC report. It states that climate change can have an impact on many areas in India.
According to the 2020 Review of Climate Disclosures received from the global insurance industry, Indian insurance companies are among the worst performing companies among their global peers. Because of which they also face more promises related to their climate risks.
According to data from Climate Trends, the Climate Vulnerability Assessment Survey of Small, Large and Medium Enterprises, including the insurance sector in Maharashtra for the year 2021, has revealed that nearly half of the industries feel that there is a need to re-evaluate the business model and plan. Is. At the same time, more than a third blamed climate change for the loss of capital. 6 out of 10 industries want to eliminate climate hazards and develop a successful risk-transfer and pricing system that is compatible with the external environment.
Insurance is still decreasing in the country
According to Dr. Saon Ray, Visiting Professor, Indian Council for Research on International Economic Relations, the Indian insurance sector is facing various challenges. Such as low penetration of insurance, low rate of density and low participation of insurers in rural areas. The market for insurance against specific risks like natural catastrophic events in the country is largely underdeveloped. For example, the risk of floods in India is more pronounced than ever. But insurance companies paid only claims equal to less than 10 per cent of the actual damages caused during the Kerala floods in 2018. Because, according to which the risk is increasing, the insurance is still decreasing.
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A lot of damage due to cyclone Amphan