One of the essays in ‘India Development Report 2011’ edited by D. M. Nachane (www.oup.com) looks at the financing of disaster management. “Rightful claims of compensations from negligent party responsible for causing a manmade accident face the severe hurdle of tedious litigations. Disasters bring many claimants together who may sustain the harrowing judicial process,” frets the author Nirmal Sengupta, citing the Bhopal gas leak (1984) and the Uphaar cinema hall fire (Delhi, 1997).
He traces how the Ninth Finance Commission (1989-95), coinciding with the International Decade for Natural Disaster Reduction, introduced a Calamity Relief Fund (CRF), which has become the major source of finance for meeting relief expenses. Between 2000 and 2005, an average of Rs 2,200 crore was distributed from CRF each year, one learns.
Of interest in the essay is the section on insurance. A reassuring data point cited by the author is that in the 2006 floods which affected many industries in Gujarat and Andhra Pradesh about 12 per cent of total losses were insured. “In many developed countries, private insurers are reluctant to cover disasters. The situation in India seems to be better.”
ADVERTISEMENT
Reminding that disaster insurance is desirable but not an easy-to-implement proposition, the author gives examples of how the insurance market in India has begun to feel the pinch. For instance, after the Mumbai floods in 2005, the General Insurance Corporation alone had settled claims worth Rs 650 crore; and insurance claims amounting to Rs 1,800 crore were the consequence of the 2006 floods that hit several large industries at Vadodara, Hazira, and Bhadrachalam, as the essay notes.
“Following global practice, after the World Trade Centre attack, India too had created its catastrophe insurance mechanism for damages caused by terrorist acts. Till recently, there was no claim from this terrorism pool.” Stating that the first-ever disbursement from this pool was made to the Taj and Oberoi hotels after the 2008 attacks, Sengupta wraps up by highlighting a consequence – that the insurance companies have raised the premium for terrorism cover.
ADVERTISEMENT
ADVERTISEMENT
**
BookPeek.blogspot.com