The eastern coast of India has had to bear the brunt of nature’s fury yet again. Cyclone Fani hit Odisha on Friday, and though its menace as a storm was downgraded from “extremely severe" to “very severe" a few hours after it made landfall, it has left a trail of destruction that should make us revisit what we mean by “preparedness". That one million were evacuated in advance was creditable, to be sure. This kept the human casualty count lower than it might otherwise have been, a far cry from the 1999 super cyclone that battered the same state and left over 10,000 dead and several more homeless. The scale of that tragedy had been a shock, but it took the 2004 tsunami for the National Disaster and Management Authority (NDMA) to be set up. Created by an Act of Parliament in 2005, it was this body that swung into action last week to keep people safe. Now, however, it’s time to move to the next level and work out ways to minimize the loss of property and assets as well. While there are always calls for the government to make ex-gratia payments, the burden is best borne by insurance, a much- neglected tool that spreads the risk of exposure to calamities across large populations.
Countries the world over, even prosperous ones such as the US, are struggling to design effective insurance programmes for the disaster struck. Costs need to be kept low for the country’s government as well as citizens, both of which must share the premium fees that would form a pool of funds needed to provide relief. The need for such a scheme is even more acute in a country like India, whose northern region sits on a tectonic fault and is susceptible to earthquakes, even as its seaboards are often at the mercy of dangerous storms, especially the East coast. Rather than waiting for a model to emerge in the West, the government should try to devise its own national disaster insurance policy. Inputs could be taken from the NDMA, insurance companies and the sector’s regulator. The principle of progressive rates would need to apply, since the capacity of a fisherman in Gopalpur to pay a premium may not be the same as that of a merchant in Bhuj. Also, risk exposure levels vary. Not all disasters can be foreseen by satellites. Earthquakes strike without warning. Floods, in contrast, take time to turn treacherous. Insurance coverage will give insurers an incentive to push for better information systems, risk analysis and precautionary mechanisms.
Implementing such a scheme for the most vulnerable, particularly the poor, will not be easy. Many will ask why the state exchequer shouldn’t fund all relief efforts. The difference is that governments usually don’t have enough money, while insurers are risk specialists and are financially geared for it. Also, insurers are given to covering their own risks of massive payouts by getting re-insurance protection, a global industry that pools risks across the planet. Admittedly, such big-ticket schemes do face resistance. After Hurricane Katrina, which hit the US in 2005, real estate developers and mortgage lenders there opposed a move to require more homeowners to buy flood insurance, as they saw it stifling new construction. Still, we need a modern way to alleviate the misery of the poor and enable a quicker return to normalcy on all fronts. Think of it as another kind of Ayushman Bharat.