The Indian insurance industry and climate change: exposure, opportunities and strategies ahead

What is the preparedness of the Indian insurance industry to deal with the growing frequency and severity of natural disasters? We examine this question and argue that the continuation of present practices is not sufficient to address the challenges posed by climate change. The potential impact of climate change on the Indian economy can be severe, given the country's history of disaster losses, which is compounded by growth in population concentrations and burgeoning development in coastal and flood-prone areas. Targeted strategies are needed to deal with the rising costs of claims caused by climate change in a fledging Indian insurance market. The key challenges are to improve penetration of the available insurance products and to develop innovative delivery mechanisms to improve the access of the most vulnerable communities. Insurance is only a part of the solution, and must be combined with other measures that foster genuine preparedness and adaptation.