Even as the intensity of weather events increase and the economic losses soar, the protection gap continues to impoverish households and destroy small businesses. “In India, only around 8% of the total losses are covered. So, there is around 92% protection gap during the period 1991 to 2021. So, early intervention is needed to close the protection gap, which are in all lines (life & non-life) of insurance,” the report said.

Assessing the damage caused by the 2020 floods, the report said that economic losses were to the tune of Rs 52,500 crore, but insurance was only 11% of these. If the government had provided insurance, the premium for the sum assured of Rs 60,000 crore would have been in the range of Rs 13,000-15,000 crore.

Besides the intensity of weather events, changing trends also expose the economy to large losses. For instance, weather events can completely destroy the functionality of solar panels. In 2019, a single hailstorm generated a $70-million insurance payout for a Texas solar farm.

(With inputs from agencies)