Earthquake insurance: Indian coverage is inadequate

On 17 February, a 4.0-magnitude earthquake jolted Delhi-NCR, not strong enough to cause damage, but powerful enough to cause concern.

- SHISHIR AGARWAL

Too often, mild tremors are brushed aside as routine, yet they are stark reminders of India's seismic vulnerability. With nearly 59% of the country's landmass at varying degrees of risk, the real question is not if a major quake will strike, but when. While this is a region-specific, once-in-150-year event, should it occur, we would need financing for the four 'R's of rescue, relief, reconstruction and rehabilitation. India has a robust disaster risk financing mechanism, but needs to focus on insurance and ring-fencing in preparation for a significant seismic event.

Loss and damage: Earthquakes are sudden and each is unique, leaving little time for preparedness and response. Homes collapse, people die, businesses shut down and infrastructure crumbles. The burden often falls on individuals and governments and without a structured earthquake insurance system, recovery is painfully slow, pushing families into years of financial distress. The 2001 Bhuj earthquake resulted in losses exceeding ₹10,000 crore. India's quake insurance penetration remains low largely due to lack of awareness, a weak push from insurers and an element of fatalism among people, as also the belief that the government will provide sufficient relief. However, global experience shows that public finances are often inadequate, covering only a fraction of actual economic losses.