Mr. M. Shashidhar Reddy, Vice – Chairman on National Disaster Management Authority, at the foundational ceremony of the two – day seminar on risk management in Pune and based on his study on international practices suggested the mechanism of having a compulsory disaster insurance for residential properties in urban areas.
He also suggested that insurance should be made mandatory for malls, theatres, hospitals and hotels.
Adding to the above, he said recommended that it should apply to all urban property tax payers and is expected that the premium will reflect the improvement efforts such as adherence to BIS codes. He also pointed out the requirement of third party insurance by religious trust or third party administrator.
Hi recommendation was based on the fact that from 2002 – 2011 the expenditure of National Disaster Response Force exceeded the income made available to them. The deficit was to the tune of Rs. 2,800 crores. At the time of disaster / calamity funds have to be deployed under this head from other budgeted heads.
He also pointed out the important role of private sector insurance companies in mitigating the risk. Insurance can be taken from them for reconstruction, which will thereby ensure liquidity of funds and at the same time reduce the burden on them.
Lastly he said that insurance penetration in India is at a very low level. India ranks in top 17 countries where insurance penetration level is at a non acceptable limit. A study revealed that 85% of the losses from the year 2004 – 2011 were uninsured.