Biggest policy: NDMA plans disaster risk insurance for all

Insurance companies will provide cover against natural perils to whole communities.

ISLAMABAD:

The National Disaster Management Authority (NDMA) is finalising what it believes is one of the world’s largest disaster risk insurance policy to compensate the calamity-hit communities.

NDMA chairman Zafar Qadir told The Express Tribune that the proposed National Disaster Risk Insurance (NDRI) will compensate communities at the time of any natural calamity and also provide cover to the national economy.

The NDRI will work as any other insurance policy, the insurer will receive premium from the government and provide aid and assistance to affected community in case of disaster.

“The proposed NDRI policy will be based on a Disaster Risk Fund,” Qadir said adding international underwriters will be engaged to hammer out blanket cover for the life and property against a proposed annual premium that would be equal to 3% of the Disaster Risk Fund.

International insurance companies are willing to form a global consortium to run the NDRI and manage the Disaster Risk Fund, he said.

“The NDRI will be the biggest insurance programme of its kind and all citizens will be insured against any possible disaster,” he maintained.

Essentially, the policy would cover the lives of breadwinners and risk to food supplies, shelters and crops. Urban businesses and primary products will also be focused in the policy, he said.

According to the NDMA chief, many international insurance companies have expressed their desire to invest in this sector.

He said various insurance companies will cover communities in different parts of the country. In case of claim, that is occurrence of a disaster, the insurers will have to demonstrate prompt response as per their mandate in the respective districts by providing shelter, food, and medicines.

The insurers will also rehabilitate and rebuild the affected communities. The government will only pay premium as per agreement, Qadir said.

He said that the underwriters and the actuaries will be facilitated by the Poverty Index Database and Demography Data prepared by the Benazir Income Support Programme to ascertain the financial impact of disasters on communities of any particular town of the country.

“The vulnerability of every area with respect to the probability of disaster and its financial impact will be identified to cope with the challenge and the insurance company of the respective area will prepare itself to handle any emergency,” he said.

The government will pay funds on behalf of the poor and Zakat could also be diverted towards such a programme, Qadir said, elaborating that the higher income groups will also contribute as per their financial position and the government will cover the shortfall from its CSR.

The policy will be finalised by the next monsoon and some areas will be taken as pilot programme in the first phase, he stated.

Published in The Express Tribune, November 24^th, 2012.