MUMBAI: The home ministry has written to various ministries asking them to look at obtaining #insurance for reconstruction of critical assets after a natural disaster. Such an insurance cover will help in reinstating the assets immediately without the government having to arrange for unplanned expenditure.
At present, most government assets are not covered by insurance. This is because given the high total value, the assets would be uninsurable. Also, the cost of providing cover to iconic structures is high. Given the limitations, the government is seeking insurance not as an “all risk” cover but only to compensate the cost of reconstruction in the event of a natural disaster.
“The government has marked us a copy of a letter written to secretary level officials in various ministries asking them to explore the possibility of insuring critical assets,” said R Chandrasekaran, secretary general, #General Insurance Council—the association of non-life companies in India. He was speaking on the sidelines of an event organized by Asia Insurance Post.
The National Disaster Management Agency (NDMA) had after receiving inputs from the insurance industry submitted a report to the government where it said that “Ex ante risk financing mechanisms like insurance form a critical part of a comprehensive disaster strategy”.
Industry officials say that in societies where the insurance penetration is high such as Japan and US, human casualties are much lower. “This is because #insurance companies prescribe adequate building standards and as a result building collapses are much less,” said an official with a public sector insurance company.
“In most natural disasters in India, the level of claims paid out is very low. This is because most losses are to government assets or to those living below poverty line,” said an insurance official. One of the objectives of the Prime Minister’s insurance schemes is to ensure that everyone is adequately protected for personal accident and loss of life during a calamity. There has also been a proposal where state governments would buy insurance cover for below poverty line families who will then get compensated by insurance companies during a disaster. However, this proposal is yet to take off.
Curated From : Government eyes insurance for key assets