After the agriculture sector was devastated by two successive years of massive floods, the government appears to be exploring the option of creating a state-sponsored crop insurance scheme to help offset the impact of natural disasters.
At a meeting at Bilawal House in Karachi on Saturday, President Asif Ali Zardari met with officials from the government-owned State Life Insurance Company (the largest insurer in the country), Zarai Taraqiati Bank, the State Bank of Pakistan and the finance ministry to discuss ways in which crop insurance might be introduced in Pakistan.
The president was of the view that global climate change had made it more likely that Pakistan will continue to be hit by extreme weather patterns, including droughts and floods, and that the best way to offset the economic impact of those changes was to introduce insurance.
The president’s ideas seem to have broad support from the business community. Representatives from the All Pakistan Textile Mills Association (APTMA), one of the largest and most powerful business lobbies in the country, met with Zardari on Friday and had put forth ideas that were similar to the crop insurance the president wants to introduce.
State Life and the central bank will be working together to create a framework for how crop insurance might be introduced into the country. Among the ideas suggested to reduce the incidence of insurance fraud was the use of satellite mapping techniques which insurance companies might be able to use to accurately assess damage claims.
The government estimates that the floods in 2010 cost the economy more than $10 billion in damages.
Published in The Express Tribune, September 25th, 2011.
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