India needs insurance pool to cover natural disasters: SBI Research

India should create a disaster pool with public-private partnerships to ensure losses against natural disasters, said a note released by SBI Research on Monday. It said that as the number of natural disasters is increasing, the country needs an insurance model to protect against disasters which could offer benefits over government loans and grants during a crisis.

"Apart from the typical issues of planning up of urban infrastructure, the crucial issue of protection gap (uninsured losses) is almost neglected in a country like India," the note said, highlighting that economic losses from the floods in northern India and cyclone in Gujarat would have totalled ₹10,000-15,000 crore.

The protection gap in the case of India is 92%, much higher than the global average of 54%, it said.


"India is a hugely under-insured country, compared to global peers. The insurance sector and governments need to actively engage and discuss how best to address the potential contingent liabilities," said SBI Research.

Citing the example of the 2020 floods, the researchers said the total economic loss amounted to ₹52,500 crore and that the premium to cover such losses would have been ₹13,000-15,000 crore.

"We believe the regulator/government should come out with some standardised products for various sectors so that the protection gap in each segment can be reduced significantly," said the note.

There is a need to offer higher protection for workers, especially in the MSME (micro-small and medium enterprises) sector, it said.