India’s vulnerable communities are increasingly exposed to climate change impacts, yet innovative insurance solutions and collaborative efforts are lighting the path for greater resilience against extreme weather events
As climate change intensifies, vulnerable communities in developing countries like India face growing risks. A widening insurance coverage gap prevents many from safeguarding their livelihoods against extreme weather. Insurers must collaborate with policymakers and stakeholders to create products and partnerships that direct capital towards climate adaptation and resilience.
With the planet warming and extreme weather events becoming more frequent, insurers are struggling to cover soaring economic losses. In 2023, the insurance sector faced record net underwriting losses exceeding $100 billion. Insurers often respond by withdrawing coverage from high-risk areas, raising premiums, and exiting vulnerable communities. This leaves many without insurance, driving prices higher and shrinking the risk pool.
Extreme climate events cast a shadow over nearly every aspect of the country's economy and society. Agriculture, comprising 15 percent of GDP and employing 40 percent of the population, is particularly hard hit. Between 2015 and 2021, the country lost 33.9 million hectares of crops to excessive rain and 35 million hectares to drought. Economic losses from climate impacts in 2021 reached a staggering $159 billion, with a projected 5.8 percent decline in working hours by 2030 due to heat stress, equivalent to 34 million full-time jobs.
India has seen significant development in recent decades but risks losing ground due to climate perils like heatwaves, floods, and earthquakes. The scorching summer of 2024 saw Delhi record its highest-ever temperature of 49.9 degrees Celsius, causing school closures and heat alerts. The agricultural sector and rural households, which are heavily dependent on nature, are especially vulnerable.
By 2050, an estimated 45 million people may be forced to migrate due to climate change, impacting local economies and reducing tax revenues. To build climate resilience, insurers, policymakers, and stakeholders must advance solutions that protect and support vulnerable communities.