Mr Arindom Baidya, Agricultural Analyst at the Centre for Insurance and Risk Management presented on Promoting adaptation through information; flood insurance and weather insurance at the Financial Instruments for Climate Change Adaptation seminar on May 16th 2011.

1. Building safety nets for the vulnerable against catastrophe & weather vagaries Arindom Baidya CIRM - IFMR May 16th, 2011

2. Centre for Insurance & Risk Management CIRM was established in the year 2006 as a design and research centre at Institute of Financial Management and Research (IFMR), Chennai Engage in product design & action research to facilitate greater market outreach of risk management solutions to poor households About Us

4. Comprehensive risk reduction for farmersWay Ahead Flow of the Presentation

5. Disaster Management Short-term emergency assistance Long term infrastructure & sustainable development assistance Liquidity Gap Role of Insurance Emergency Response Reconstruction & Rehabilitation Recovery Time Catastrophe Adapted from CCRIF: Application of risk analysis & modeling in insurance sector

6. Promoting Preparedness Role of Insurance The Tradeoff Significant amount of money locked in disaster relief funds.

7. Promoting Preparedness Role of Insurance The Tradeoff Insurance can help unlock the money that is kept for relief and use it for climate change adaptation and mitigation

9. Insurance doesn’t affect the average outcome of insured event

10. Insurance spreads cost over time & geography

11. Climate change induces covariate risks at a global scaleRisk Management Framework Promote actions that generate net social benefits under all future scenarios of climate change.

12. Adaptation Strategy Risk Management Framework

14. Enhance adaptive capacity

15. Evaluate cost effectiveness of resilience building measures

16. Promoting Loss Reduction

17. Information about risks

18. Advice on adaptation options

19. Provide suitable insurance options

20. Developing New Insurance Products

21. Assessment of risk & vulnerability

23. Risk Reduction: OXFAM in Bangladesh Raising Homes: Increasing flood intensity Move houses onto higher foundations helps protect people’s homes. Meso-Level Flood Insurance Raised Tubewells: Floods contaminates water supply Raising tubewells can prevent potentially fatal diseases.

24. Risk Reduction: OXFAM in Bangladesh Radios: Changing farming calendars, Delay in flood warnings Weather forecasts, Special broadcasts alert Meso-Level Flood Insurance Rescue Boats: Slow response by official rescue agencies Rescue boats with the DMCs

25. Residual Risks: Embankment Breaches Recurring Floods – 1962 (3 floods in July, August, September) Intense Local Floods – Sylhet (1966), Catastrophic Floods – Inadequate funds for ex-post relief & rehabilitations (1987 , 1988, 1998) Meso-Level Flood Insurance 1998 2/3rd of Bangladesh flooded for almost 13 weeks 1.2 million of Grameen’s 2.3 million customer affected

26. Meso-Level Flood Insurance: Bangladesh CIRM is designing flood index – based insurance schemes for catastrophic floods, where the MFIs are insured. Project Details: Design - CIRM, IWM Implementation - OXFAM GB Insurer - Pragati Insurance Project Location - Sirajgunj , BD Initiation - 2009 Meso-Level Flood Insurance

27. Structure of Flood Insurance Client Data Digital Evevation Model Payout Structure Financial Module Meso-Level Flood Insurance Analysis Hazard Module Loss Module

28. Creating Risk Awareness Free weather forecasts, advisory messages & regular real time weather data on farmers’ mobile phones CIRM is testing the concept of bundling weather insurance & weather forecasts Comprehensive Risk Management Project Details: Implementation : WRMS Research: CIRM Insurer: ICICI Lombard Project Location: West Bengal & Assam Initiation: 2009

29. Poor acceptance for complex products Complex product considered opaque by the farmers & distributors. -Farmers may view the process to be vulnerable to manipulation. Distribution Challenges

30. Improving acceptability Handling Product Complexity Split product according to multiple weather variables for ease of understanding. Distribution Solutions Handling Trust Issues Enroll Local Agro-input dealers, cooperatives, MFIs and NGOs as point of servicing

32. Risk cover for shorter period and identifiable loss triggersDistribution Solutions Project Details: Design : IFPRI, CIRM Insurer: HDFC Ergo Project Location: Madhya Pradesh Initiation: 2010

33. Obstacles in designing Poor data availability Loss data Client data Vulnerability research Poor disaster monitoring infrastructure Lack of climate change models Way Ahead http://www.microinsurancemap.com

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