1. ROLE OF INSURANCE IN CATASTROPHE RISKS - INDIA Hazard Identification Risk Assessment Risk Prevention Mitigation PC James Executive Director IRDA

2. IRDA MISSION Policyholder Protection Speedy & Orderly Growth of the Industry Promote High Standards Customer to be informed/advised Customer Service/Grievance Redressal Promote fairness & transparency Encourage Self - Regulation

3. CURRENT INITIATIVES OF IRDA Micro – Insurance Health Insurance Intermediary Development Detariffing Catastrophe Risks

4. KEY ASPECTS OF FINANCIAL VULNERABILITY Catastrophe Risk Exposures Insurance penetration Size of the country Diversification/concentration of economic activities (geographically)

5. INSURANCE AS INSTRUMENT OF STRATEGIC MITIGATION Disasters have significant economic setbacks at ind./comm./society levels The poor & disadvantaged suffer most Insurance significantly empowers people & economy Shifts burden from aid / state intervention

6. INDIA – COUNTRY PICTURE Notedly vulnerable Risk include-drought, floods -cyclones / storms -earthquakes -tsunami, etc Vulnerability maps indicate areas of multiple risks

7. RECENT MAJOR DISASTERS Maharastra (Latur) earthquake-1993 Gujarat cyclone-1998 Orissa (super) cyclone-1999 Gujarat earthquake-2001 Tsunami-2004 Mumbai/Gujarat/Bangalore/-2005 Chennai floods Kashmir Earthquake-2005

8. NATURAL DISASTERS IN INDIA 1990-2005 # of EventsAffectedDamages $US (000's) Drought 21 1,391,841,0001,898,721 Earthquake 24 24,966,300524,900 Epidemic 62 264,2770 Extreme Temperature 38 0144,000 Flood 167 676,372,85010,365,781 Slides 38 222,3004,500 Wave/Surge 2 647,5991,500,000 Wild Fires 2 02,000 Wind Storm 136 82,279,3408,773,500

9. HAZARD MAP Wind & Cyclone

10. EARTHQUAKE

11. FLOOD

12. DISASTER MANAGEMENT a multi-disciplinary approach valuable studies by GOI, WB, other bodies incl. reinsurers preparedness plans recovery plans

13. RISK & INSURANCE To move disaster management from passive to active Work on to identify/reduce/transfer risks Resulting risk reduction a tool for sustainable development Insurance can incentivise risk reduction approaches It can monitor the quality/extent of mitigation measures Pushes the burden of loss from state/ community to insurer

14. HAZARD IDENTIFICATION Hazards spread across areas (use of historical data) Exposure assessment based on concentration (people/assets) Vulnerability (intensity) estimation calculation of damage ratio Estimation of probable maximum loss (PML) Readiness for the unexpected

15. RISK ASSESSMENT Keeping track of socio-economic changes Understanding climatic changes Identifying urban/other concentrations Evaluating existing risk paradigms Predicting future scenarios

16. RISK ASSESSMENT Contd. Risk mapping Use of experience data Inspections / reports Research & studies

17. RISK ANALYSIS – THE RISK CHAIN Environment Hazard / Risk Factors Exposure Units Consequence Outcome Perils

18. RISK CONTROL / PREVENTION Risk avoidance Risk Reduction Risk neutralisation Loss prevention Loss reduction

19. MANDATED RISK CONTROL Land use planning & building code enforcement Strengthening of building codes Compliance with environmental laws Fire prevention rules compliance

20. USE OF POLICY TERMS & RATES Underwriting & risk scan Inspection & recommendations Use of warranties & conditions Rate variations Deductibles

21. INSURANCE FACILITATION MEASURES Introduction of new policies Weather insurance Agricultural insurance Micro-insurance policies Compulsion to include cat covers (exclude as option to policy purchaser) riot, strike, malicious act, storm, tempest, flood) Option to add earthquake terrorism

22. PENETRATION INITIATIVES Micro insurance regulations Bancassurance / covers riding on credit products New intermediaries – Brokers Corporate Agents Government channels Corporate channels – E- Chopal

23. BUILDING CAPACITY Insurers Reinsurers Terrorism Pool Natcat Pool

24. RESPONSE AFTER CATASTROPHES Rapid response measures -get loss assessors to the spot -communicating in media -confirming proof of loss generic/specific -interim payments -time frame for settlements

25. COORDINATED APPROACHES Liaison with authorities Cooperation / coordination among insurers Adopting standard practices Empowerment of officials Board/Regulator/ Govt. oversight

26. THANK YOU