Importance of disaster risk insurance

Source: The post importance of disaster risk insurance has been created, based on the article “Why climate change is a national security issue” published in “Indian Express” on 17th October 2024

UPSC Syllabus Topic: GS Paper 3– Disaster Management

Context: The article discusses the importance of disaster risk insurance in protecting both individuals and the economy from the impacts of disasters. It emphasizes the need for early warning systems, compensation, and insurance to secure human and national security.

For detailed information on Disaster Management Act 2005 read this article here

How do disasters affect personal and national security?

1. Disasters can devastate personal lives, rendering even middle-class families homeless, as seen during earthquakes.
2. Nationally, disasters hinder economic growth, impacting India’s $5-trillion and $10-trillion economic goals.
3. Disasters lead to downturns, damaging infrastructure and disrupting livelihoods.
4. In 1991, Bangladesh lost 140,000 people to a super cyclone, causing long-term human security challenges.
5. The 2011 Haiti earthquake killed 316,000 people, forcing migration due to inadequate recovery efforts.
6. Pakistan’s 2022-23 floods displaced 2.6 million people, making them vulnerable to exploitation by extremist groups, further destabilizing national security.

What role does disaster risk insurance play?

1. Disaster risk insurance helps people recover from losses after a disaster.
2. Prime Minister Narendra Modi’s Ten-Point Agenda on Disaster Risk Reduction (DRR) highlights the importance of risk coverage for everyone, including households and companies.
3. Insurance cannot stop disasters, but it can ensure that people receive compensation to rebuild their lives.
4. Many countries use disaster risk insurance to ensure faster recovery.

Why is disaster-related insurance important in India?

1. India is now focusing on disaster-related insurance as it realizes the importance of protecting people and the economy.
2. The National Disaster Management Authority (NDMA) is working with insurance companies to develop effective insurance models.
3. Parametric insurance is being considered, as it offers quick payouts based on agreed disaster parameters, avoiding lengthy claim processes.

How can disaster risk insurance strengthen human security?

1. Human security is crucial for national security, especially in conflict-prone regions.
2. Countries like Bangladesh and Haiti have struggled with the aftermath of disasters, leading to displacement, illegal migration, and vulnerability to radical ideologies.
3. Pakistan’s floods displaced 2.6 million people in 2022-23, and without proper recovery support, these people could be exploited by extremist groups, just like Afghan refugees were in the 1980s. Disaster risk insurance can reduce such vulnerabilities.

Question for practice:

Discuss how disaster risk insurance can strengthen human and national security.