“Our parametric insurance model ensures that financial assistance reaches the affected communities and regions without delays, helping strengthen resilience against natural disasters. As climate variabilities increase, parametric insurance plays a vital role in achieving sustainable development. By providing compensation for losses incurred, we’re facilitating recovery measures and protecting the infrastructure and economy.” Naveen Chandra Jha, MD and CEO of SBI General Insurance
Mumbai: SBI General Insurance, a subsidiary of State Bank of India, paid the first claim of Rs 1.06 crore to the Nagaland State Disaster Management Authority (NSDMA) under its Disaster Risk Transfer Parametric Insurance Solutions (DRTPIS), which enables claim settlement, based on weather data parameter, without the need for individual intimation for claim processing.
SBI General Insurance Company & Nagaland State Disaster Management Authority (NSDMA) had signed a the Memorandum of Understanding (MoU) in August 2024, for establishing a three -year partnership supported by key reinsurers GIC Re, Munich Re, Hannover Re and SCOR, who played a crucial role in enhancing disaster management efforts.
North eastern state of Nagaland, which was the first state in the country to avail such a parametric cover to manage its losses out of natural disasters, had paid around Rs 4 crore of premium to SBI General for a total coverage of Rs 50 crore with a provision of no claim bonus.
Speaking of this significant milestone, Naveen Chandra Jha, MD and CEO of SBI General Insurance, said,” Our commitment to developing innovative insurance solutions has led to the successful implementation of the Disaster Risk Transfer Parametric Insurance Solutions (DRTPIS) in Nagaland. We have facilitated a claim settlement of ₹1.06 Crore to the Nagaland State Disaster Management Authority (NSDMA), demonstrating our dedication to disaster resilience & quick settlement.”
He further added, “Our parametric insurance model ensures that financial assistance reaches the affected communities & regions without delays, helping strengthen resilience against natural disasters. As climate variabilities increase, parametric insurance plays a vital role in achieving sustainable development. By providing compensation for losses incurred, we’re facilitating recovery measures and protecting the infrastructure and economy.”
Z. Nyusietho Nyuthe, advisor to NSDMA, emphasised that in the face of increasing climate variability, a Parametric Disaster Risk Insurance Solution is a crucial component in achieving sustainable development.
The settlement covers excess rainfall during the Phase-1 (Monsoon season) under the risk policy period, ensuring swift financial assistance to mitigate the impact of natural calamities.
The DRTPIS framework is designed to enable rapid disbursement of funds, aiding communities in their recovery efforts. This collaboration with NSDMA highlights the effectiveness of Parametric Insurance models in disaster management, providing a scalable and efficient mechanism for risk transfer and financial protection against climate-related events. The funds will be further distributed to communities affected by rainfall.
This parametric insurance solution represents a significant advancement in Nagaland’s disaster mitigation and resilience strategy. This innovative product is designed to facilitate rapid recovery in the event of natural disasters, providing timely and effective relief to those affected.
“The story of Nagaland venturing into Disaster Risk Transfer Parametric Insurance Solution (DRTPS) is the spark in the history of Parametric Disaster risk transfer insurance in the country and around the globe. This solution is being studied by many insurance industries in the development of risk financing,” said NSDMA.
Nagaland’s DRTPS has made a positive contribution to India’s risk financing mechanisms, with a special provision set to be included in the 16th Finance Commission.