We instinctively donate for the relief of disasters, but while relief reduces suffering and helps recovery, it seldom reduces the risks faced by vulnerable communities. In fact, a growing emphasis on relief diverts attention from preventing future disasters, which perpetuates the vulnerability of communities at risk. Donors need also to start investing in reducing risk, and disaster insurance is one way to do it.
The majority of low-income communities at risk in India are not protected from the loss of life, livelihood and assets that results from their vulnerability to natural disasters. India’s National Policy on Disaster Management, drawn up in 2009, concedes that the government cannot compensate all the victims of a disaster at a sufficient scale and speaks of promoting new financial tools such as ‘catastrophe risk financing, risk insurance, catastrophe bonds, micro-finance and insurance’ to cover such losses. However, this policy is not matched with investment from private or public sources.