The country has been devastated by floods, particularly in states like Himachal Pradesh and Uttarakhand. According to SBI’s study report, Ecowrap, the economic damage caused by the floods is projected to be in the range of Rs 10,000–15, 000 crore. According to the report, the country is very concerned about the severe toll that these floods and other natural catastrophes like the most recent storm in Biparjoy have had on the nation. The country is prone to a number of natural hazards, it was also stated, due to its geographic and locational characteristics.
A brief about flood-related economic damage could total Rs 15000 crore, according to SBI Ecowrap
“While the current status of economic loss due to these floods is yet to be estimated, we believe this in the range of Rs 10,000-15,000 crore,” the report said.
Next to the US and China, India has had the third-highest number of natural catastrophes since 1990. India has recorded 764 natural catastrophes since 1900, including landslides, storms, earthquakes, floods, and droughts. Between 2001 and 2022, India saw 361 events, compared to 402 during 1900 to 2000.
According to the report, the frequency of these occurrences has caused new highs in economic stress. India experiences floods more often than other countries. According to the research, storms and floods accounted for over 41% of all natural disasters.
According to the SBI research, India has a significant protection gap related to insured losses. $125 billion of the $275 billion in economic damages worldwide in 2022 resulting from natural disasters were compensated by insurance. “The overall protection gap has grown to $151 billion in 2022, which is significantly larger than the $130 billion 10-year average but still accounts for about 54% of all losses that are uninsured. Although still substantial, this protection gap is less than the 61 percent average of the prior ten years, it was stated.
This protection gap percentage is at 92% in India. In practice, an average Indian is insured in India for about 8% of what may be needed to shield a family from financial shock in the event that the breadwinner passes away. This entails having only 8 rupees in savings and insurance for every 100 rupees in protection required, leaving a 92 rupee protection gap, the report noted.
The need for a “disaster pool” for natural disaster risks involving the insurance industry was emphasized in the report. The entire economic loss from the 2020 floods in India was $7.5 billion (Rs 52,500 crore), however just 11% of that amount was covered by insurance, the report stated.
The COVID-19 pandemic was also mentioned in the SBI study report, underscoring the necessity of enhancing corporate and public health readiness. Governments and the insurance industry should talk about potential contingent obligations, it continued.
For natural disasters, India requires “out-of-the-box solutions,” and businesses need to be aware of the protection gap. “Only 5% of the units in the MSME sector are insured nationwide. This industry need far more protection,” it continued.
It proposed a joint program with the government to provide social security for MSME employees in the form of insurance benefits and income protection for their families.
