Embed Size (px)
Citation preview
GIRIRAJ AMARNATH
International Water Management Institute (IWMI)
INVESTING IN DISASTER RESILIENCE: RISK TRANSFERTHROUGH FLOOD INSURANCE IN SOUTH ASIA
Photo: World Bank
Workshop on Addressing Disaster Risks Specific to South and South-West Asia
30 - 31 October 2017, Kathmandu, Nepal
Human Cost of Natural Disasters and Its Impacts
IND819m
PK50m
BGL127m
Global Assessment by Natural Disasters
Number of disasters and affected people reported per country (1994-2013)
The Problem
• Extreme weather events are increasing in their frequency and intensity• Economic losses from weather-related disasters in developing countries
accounts for 10 billion over the past decade• Non-economic losses such as the lost of lives, livelihoods and
ecosystems further aggravate the situation
=> the Protection Gap in India is significantly higher than global average
There is currently an active international dialogue on establishing a regional initiative for disaster risk financing (DRF) for Asia.
The topic of an Asian disaster risk financing facility has been raised in various forums, including the Association of Southeast Asian Nations (ASEAN), Asia-Pacic Economic Cooperation (APEC), the G-7 InsuResilience Initiative, and the Vulnerable 20 Group of Ministers of Finance (V20), World Bank-GFDRR and others
Source: World Bank
Key challenges
• Inability to put in place pre-requisites for an efficient catastrophe risk financing instruments
• Undeveloped insurance sector• Inadequacy in local insurance laws with respect to post-disaster damages
Source: ADB
• Lack of risk awareness at the government level and among public • Perceived low probability of disaster,
hence insurance is of low priority• Lack of understanding on insurance by
locals;• Low awareness of insurance benefits
vis-à-vis costs (premium)• Lack of technical knowledge and experience
• Build complex insurance models and carry out loss assessment
• Adapt to climate change effects• Availability and Sharing of various data in
risk transfer mechanism
Closing the Protection Gap – Various Options
6
gap
Which risk?
Governments
Who carries the risk?
PoolingInsurance schemes and pools
to increase insurance penetration
MacroRisk transfer solutions
for (sub)sovereigns to cover their direct or indirect costs
MicroSimplified products distributed
via aggregators such as MFIs, NGOs, and corporates
Risk transfer solution
Businesses, homeowners,
farmers
Public physical assets
Emergency response costs
Foregone revenue
Uninsured private assets
Livelihood assistance
Pro
tect
ion
gap
Individuals
Regional approach to promote Disaster Risk Management, including risk transfer mechanisms
• Residual risks(after risk reduction) call for risk transfer approach to build resilience
• Risk transfer is one way of dealing with these residual risks:• Climate risk insurance scheme
thus form an important part of comprehensive climate risk management approach
El-Nino andLa-Nina monitoring
Seasonal forecasts-Rainfall-Temperature-Cyclones
Intra-seasonal forecastsWet/Dry SpellsHeat/Cold waves
Weather forecastsHurricanes, blizzards, windstorms, other extreme weatherMonitoring
Flash floods, Hail Storms and tornadoes
Post-disaster
monitoring/
forecasting
Climate Change forecasts
Near-term climate forecast
D
I
S
A
S
T
E
R
Index Based Flood Insurance (IBFI)
Flood index design
Flood hazard module
Flood loss module
CropYieldloss
Economic loss
Water level
Flood ExtentFlood Duration
Crop Damage
Rainfall
Insurance payout Structure/Scheme
Government
Insurance agencies
Development banks
Farmers
IF SCALED UP, from 50,000 to 1 million farmers would be benefitted by the scheme
Remote Sensing Data for Inundated Crop Area
IBFI CONCEPT
0
500
1000
1500
2000
2500
3000
01-Jan-01 01-Jan-02 01-Jan-03 01-Jan-04 01-Jan-05 01-Jan-06 01-Jan-07 01-Jan-08 01-Jan-09 01-Jan-10 01-Jan-11 01-Jan-12 01-Jan-13 01-Jan-14 01-Jan-15
Dis
ch
arg
e,
da
ily
ave
rag
e
(m3/s
ec)
Hydrograph gauged at Benibad station in the BagmathiBasin
August 2014July 2001 August 2008
Landsat image on 15/09/2001*
Flood extent based on Landsat on 15/09/2001*
HEC-RAS model calculation result on 15/09/2001
RRI model calculation result on 15/09/2001
Landsat image on 02/09/2008*
Flood extent based on Landsat on 02/09/2008*
HEC-RAS model calculation result on 02/09/2008
RRI model calculation result on 02/09/2008
Landsat image on 27/09/2014*
Flood extent based on Landsat on 27/09/2014*
HEC-RAS model calculation result on 27/09/2014
RRI model calculation result on 27/09/2014
*For satellite image data, because of limitation due to cloud cover, results on the most recent day to the flood peaking wereshown here.
JFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASOND 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Flood Modeling: Depth and Duration Parameters
Parameters of a typical product
Sample Historical “as if” Payout
Institutional platform is crucial for the success
To participation in index
insurance design, active
engagement in field evaluation, piloting the IBFI
product and regulatory
approval and promote with State/Central governments
Insurance Industry
Secretary MoA&FW for
possible integration in
PMFBY scheme and scaling up in
other states; UNOOSA/UNSPI
DER; UNESCAP to promote
improved risk management
solutions
Int(National)
DDM, BSDMA, Cooperative, Agriculture,
Water Resources for Policy aspects
and Scaling up
State/Bihar
Panchayat Representatives,
Community leaders,
individual farmers both
men/women for active IBFI
participation
District/Villages
Building Resilience through Sustainable Development and Disaster Risk Reduction through 2030
Three broad areas that are cross cutting across DRR, DRM, DRF are:
1. Convene an Insurance Network on Sustainable Development - to improve dialogue, stimulate innovation and partnerships, and improve coherence between existing initiatives.
2. Establish a Sustainable Insurance Policy Forum - to scale up policy progress through enhanced cooperation and collaboration between governments.
3. Agree a set of Insurance Development Goals to focus long-term efforts beyond 2015.
Conclusions
• Awareness raising and risk education: Insurers and government can partner to make available risk data and information systems.
• Risk pricing: By accurately pricing risk, insurers can incentivise risk reducing decision making.
• Enabling conditions and regulation of insurance programmes: Through legislation, financial oversight and monitoring, government can provide incentives for insurance to promote risk-reducing activities.
• Direct financing of risk reduction measures: Insurers can invest directly in risk reduction measures to avoid large compensation claims.
• Risk reduction as a prerequisite for insurance: As a prerequisite for coverage, insurers can require that policy holders undertake specific disaster risk reduction measures.
Disaster risk management (ex-ante + ex-post) are crucial element of sustainable development to reduce disaster losses and enable achievement of the Sustainable Development Goals.
