Cyclonic Storm Nilam also known as Cyclone Nilam has made the insurance industry and the finance ministry come together to form an exclusive catastrophe pool to cover the losses that occur in natural disasters, according to media reports.
Once implemented, a large percentage of house owners across India will have to start paying a premium towards the insurance cover with the balance being financed by the Central or state governments, the reports added.
Cyclone Nilam was worst tropical cyclone to directly affect south India in 2010. More than 3,000 people were evacuated around Mahabalipuram in the wake of the storm. Schools and colleges in Chennai declared holidays as 282 schools had been converted into relief centers.
Nilam was initially estimated to have caused economic losses of around 700 million (US$13.23 million) to 800 million (US$15.12 million). The figures soon went up to Rs. 100 crore (US$18.9 million). Later, as the Andhra Pradesh government conducted their review on the storm, it was revealed that the state suffered huge economic losses of 200 crore (US$37.8 million).
The proposal for an insurance catastrophe pool (INCIP) could cost around Rs. 50 billion if implemented across the country. But INCIP will bring down the present undefined bill to rebuild lives after the catastrophes, providing safety to citizens, the government and the insurance sector.
The plan has been floated by the insurance regulator since 2007, but has got deferred over administrative issues. Once implemented, India will join several countries like Turkey, Norway and others which have set up such funds to share the cost of reconstruction after large scale disasters, the reports concluded.