ISF Grant Agreement announcement
Nagaland is the first Indian State to opt for insurance to increase the financial capacities of its State Disaster Response Fund. A partnership co-funded by the InsuResilience Solutions Fund kicks off a public-private partnership project strengthening the state’s climate resilience by enhancing its insurance protection against natural catastrophes.
Frankfurt, 16th March, 2021: InsuResilience Solutions Fund (ISF), managed by Frankfurt School of Finance and Management and funded by KfW Development Bank, today announced the signing of a grant agreement supporting the development of an insurance scheme for Nagaland’s State Disaster Response Mitigation Fund (SDRMF). By co-funding the development costs of the Nagaland insurance scheme the InsuResilience Solutions Fund is supporting a light-house project in the area of disaster risk management.
The project will be implemented by a partnership consisting of the Nagaland State Disaster Management Authority (NSDMA), the local insurance company Tata AIG General Insurance Company Limited, with Swiss Re as reinsurance partner and the Swiss consultancy firm Faber Consulting as project coordinator. ISF provides grant based co-funding for the implementation phase.
The Indian state of Nagaland – located to the east of Assam and west of Myanmar – is exposed to high levels of humidity and heavy rains in the monsoon months of May to September. During the Monsoon season 2017, heavy storms, flash floods, heavy rain and landslides claimed 22 lives, and caused severe damage to public and private properties, affecting 30% of Nagaland’s population. Additionally Nagaland lies in a very high seismic zone – twelve major earthquakes have occurred in the region in the last 100 years. 70% of the population is considered as poor and vulnerable and therefore are over-proportionately exposed to these extreme events.
State Disaster Response Mitigation Funds (SDRMF) are the primary fund available for disaster response measures of Indian States, with complementary funding provided by the National Disaster Response Fund (NDRF). With both funds being underfunded, Nagaland´s State Government is currently lacking the necessary resources for relief measures and the minimum compensation to victims of these disasters. To increase the state’s protection against natural catastrophes and to pilot a first insurance protection for the monsoon season in 2020, Nagaland State Disaster Management Authority (NSDMA), partnered with Tata AIG and Swiss Re. To expand and enhance the existing excess rainfall cover and develop a complementary earthquake cover, the InsuResilience Solutions Fund is now co-funding the innovative insurance programme in order to strengthen Nagaland’s resilience to natural disasters.
Johnny Ruangmei, Officer on Special Duty at NSDMA, Government of Nagaland says: “With the start of the project we will enhance the existing State and National Disaster Risk Funds by developing and implementing a parametric insurance solution for the monsoon season and earthquakes. This allows us to provide more meaningful and faster compensation in case of a disaster. Investment in risk transfer is essential to foster Nagaland’s resilience and sustainable development.”
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In light of the ongoing COVID-19 pandemic, a holistic approach to disaster relief and preparedness seems more vital than ever in order to compensate for their (in-)direct effects on economic development and growth of ODA countries. Thus, ISF especially welcomes project concepts targeting the sectors most vulnerable to effects of the pandemic, such as critical infrastructure, emergency relief and financial support of (M)SMEs, with products focusing on providing coverage against climate change related perils such as flood, wind/storm, excess rain, drought/heat wave, cold spells (in combination with others).
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About the ISF
The ISF was set up and is funded by KfW on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ). It is a key delivery channel for the InsuResilience Global Partnership, a joint initiative by the G20 and V20 countries to reduce vulnerability. The ISF supports innovative insurance solutions to mitigate negative impacts of climate change. It offers co-funding and advice for the implementation of new climate risk insurance concepts into marketable products and to expand sustainable existing products.