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KOHIMA — In what will redefine disaster response and recovery in Nagaland, the state government and State Bank of India General Insurance (SBI General) have signed a memorandum of understanding (MoU) for the Disaster Risk Transfer Parametric Insurance Solution (DRTPS).
Nagaland Home Commissioner and SBI General Insurance signed the MoU in the presence of Chief Minister Neiphiu Rio at the CM’s Office Chamber in Kohima on Friday.
The DRTPS programme, which came into effect on June 1, 2024, and is scheduled to conclude on May 30, 2027, will bring a new model of parametric insurance for disaster risk transfer and a paradigm shift in building a more resilient future in the event of a major disaster.
Briefing the press after inking the MoU, CM Rio said the insurance covers the whole state of Nagaland. The government will pay for the premium price and a mechanism will be put in place so that the state is not heavily burdened, he said, adding that there would be a "mutual benefit" for both the insurance company and the state.
Given the state's limited resources, he believes the insurance policy will serve as a vital safety net against unforeseen calamities.
The CM went on to seek public involvement for smooth implementation, saying that there will be a mechanism in all the districts to implement the insurance.
He also updated on X that the ‘parametric multi-year risk transfer solution will aid in protecting the State's critical infrastructure and reduce economic losses due to disaster’ and that Nagaland is the first Indian state to implement this disaster management insurance.
More about DRTPS
The Nagaland State Disaster Management Authority (NSDMA) is implementing the DRTPS in partnership with SBI General Insurance as insurer and GIC-Re India and Munich Re as re-insurers.
It was informed that the insurer and the re-insurers were awarded the contract through a transparent and open tender bidding process which started from February to May 2024.
The DRTPS is aimed at facilitating community-based disaster risk management for resilient communities, to build effective and sustainable risk transfer initiatives among the community in the event of a major disaster and to create a platform for public-private partnership in risk transfer initiatives in the event of a major disaster.
The programme is even more relevant amid the increase in extreme weather events caused by climatic change, resulting in economic losses across the world.
It may be mentioned that the NSDMA has implemented a DRTPS since 2020, becoming the first and only state in the country to implement such a programme with support from the InsuResilience Solution Fund from the Frankfurt School of Financial Management (funded by KfW).
The implementation has been experiential learning and turned out to be a knowledge base to design future parametric insurance solutions which the Ministry of Home Affairs and many Indian states are looking for as a model to replicate, it was informed.