Journalism of Courage
The National Disaster Management Authority (NDMA) has recommended that disaster insurance be made mandatory for residential properties in urban areas,said M Shashidhar Reddy,NDMA vice-chairman. He was speaking at the inaugural function of the two-day seminar on risk management organised by the National Insurance Academy (NIA) in Pune on Thursday.
Based on international practices,we have suggested the mechanism. It will apply to all urban property tax payers and it is expected that the premium will reflect mitigation efforts such as adherence to BIS codes and hence will also serve as an incentive for mitigation, he said.
It has also been proposed that insurance should be made compulsory for owners of malls,theatres,hospitals and hotels. Reddy added that suggestions had been made that religious institutions should require third party insurance by religious trusts or administrations in-charge.
Pointing out how the measures would require policy-level planning and decision making,Reddy said the insurance scenario in India was far from satisfactory. India has been identified as one of the 17 countries with very low levels of insurance penetration. Referring to a study conducted recently,he said about 85 per cent of the losses from 2004-2011 were uninsured.
Citing gaps in the finances to meet disaster mitigation,he said from 2002-11, the National Disaster Response Forces (NDRF) expenditure had exceeded the budget by Rs 2,800 crore. This suggests that in case of a calamity,there will be a need to supplement funds by ways of reallocation of funds from other budget heads, he said.
Reddy added that private insurance could play a pivotal role in mitigating the risk. We need to work on the possibility of using insurance for reconstruction. This will help us mitigate risks and ensure availability of liquid funds for reconstruction and therefore enable early economic recovery, he said.
