Cyclone Amphan: insurance companies pay only a quarter of damages
by Alessandra De Poli

The typhoon devastated the state of West Bengal in May last year. Indian insurance companies are among the worst in the world when it comes to covering extreme weather events, even though they reimbursed record expenses between 2020 and 2021. Intensity and frequency of typhoons are set to increase in India.


New Delhi (AsiaNews) - Indian insurance companies are among the worst in the world when it comes to covering expenses related to environmental damage. Only a quarter of the losses associated with Cyclone Amphan, which devastated the state of West Bengal in May 2021, have been repaid.

"Record insurance payment despite not paying about three-fourths of the claimed amount underlines the enormity of damages," an official from the West Bengal Disaster Management Department explained to Down To Earth.

It's a problem that's bound to remain, if not worsen: according to United Nations climate reports, the costs of extreme events will increase in India, one of the most vulnerable countries in the world in terms of environmental cataclysms.

A report published by Climate Trends, based on a review by Ernst&Young, shows that Indian insurance companies are worst in terms of information quality along with those of Colombia, Kazakhstan, Russia, Saudi Arabia, the United Arab Emirates and New Zealand.

A document from the Insurance Regulatory and Development Authority of India (Irdai) shows that 14,575 claims worth more than 17.6 billion Indian rupees (more than 210 million euros) were filed after Cyclone Amphan. More than 11 thousand claims have been reimbursed for a value of almost 5 billion rupees (about 56 million euros).

These are very high figures for Indian insurance companies, which at the most were able to pay out 1.5 billion rupees (18 million euros) for the floods in the state of Telangana (despite a request for reimbursement of 3.3 billion rupees, just under 40 million euros). 

In other words, insurance companies covered only 26% of the damage caused by Amphan, a trend seen in the case of other climate disasters as well. U.N. reports warn that even if global temperature increases remain below 2 degrees, climate change is likely to erode up to 2.6 percent of India's gross domestic product before 2100.

The latest report by the Intergovernmental Panel on Climate Change (IPCC) calls for strengthening insurance policies in this regard, given that 80% of Indians live in areas that are highly vulnerable to environmental damage.

In 2015, India was the fourth most affected country in the world by climate change, and in 2018 it experienced a 0.7 degree increase in temperatures. In practical terms, this means that cyclones will be increasingly intense and will be alternated with longer and longer periods of drought. 

Some studies show the changes in typhoons in recent years. The northern portion of the Indian Ocean consists of the Bay of Bengal and the Arabian Sea. Cyclone activity had always been concentrated in the former basin, to the east, but between 1982 and 2019 there was a significant increase in the frequency, duration and intensity of monsoon storms in the latter, to the west.

Experts specifically noted a 52 percent increase in the frequency of extreme events, an 80 percent increase in their duration, and an increase in intensity of about 20 percent in the pre-monsoon period and 40 percent in the post-monsoon period.

The cause? Rising temperatures: the record for the fastest rate of ocean surface warming in the world belongs to the Indian Ocean. It means that if in the rest of the world the increase in sea temperatures has been between 0.8 and 0.9 degrees, the increase recorded in the Indian Ocean has been between 1.2 and 1.4 degrees. 

According to the Ipcc, if India is unable to reduce its greenhouse gas emissions by 2030 (annual carbon dioxide emissions alone were 2.63 billion tons in 2019), the country will reach the point of no return. West Coast development plans in particular will need to take into account the effects of climate change.

While coastal cities, including Mumbai, are at risk of being submerged due to rising seas, 40 percent of India's population will experience water scarcity by 2050. The impact will fall primarily on socially and economically marginalized urban dwellers. Between 2015 and 2020, urban growth was 35%, with a projection of an additional 600 million residents within the next 15 years.

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