Evolution of Risk Financing in Kerala

Kerala State Disaster Management Authority vide file no. DM/1868/2019/SDMA proposed creation of disaster risk insurance for households with the title ‘Subhadram’ which was accepted by Hon’ble Chairman (Chief Minister) on 2-7-2019 to prepare a detailed costing. Accordingly, a meeting was held in SDMA with insurance companies on 8-7-2019. A detailed proposal was submitted to Government vide Email No. DM/1868/2019/SDMA dated 28-4-2020. Government examined the matter and raised a set of queries vide Ltr. No. DMA2/391/2020-DMD dated 12-6-2020. Based on the detailed response from SDMA vide Email No. DM/1868/2019/SDMA dated 16-6-2020, the Government appointed a technical committee under Dr. K. Ravi Raman, Member, State Planning Board to submit a report. The committee submitted its report on 30-6-2021.

Additionally, a study was conducted through the Rebuild Kerala Initiative to design measures ensuring financial resilience against sudden fiscal liabilities arising from disasters. M/S RMSI and National Insurance Academy was awarded the contract to conduct the study. A committee was constituted vide GO (Rt) No. 68/2025/P&EA dated 25-2-2025 for evaluating the deliverables of the study.

Four reports were submitted to the committee by the contracted agencies between March 2024 and March 2025.
1. Report 1: Inception Report, March 2024
2. Report 2: Component 1 – Hazard Risk, Economic and Financial Loss database of Major Disasters, July 2024
3. Report 3: Component 2 – State Catastrophic Risk Profile, February 2025
4. Report 4: Design of parametric indices for financial transactions with focus on housing sector and Government buildings

Based on these reports, an institutional framework for State Disaster Risk Financing and Insurance (DRFI) was established vide GO (Rt) No. 5471/2024/FIN dated 11-07-2024, focusing on infrastructure and housing to ensure preparedness for future disaster-related financial liabilities.

Subsequently, the Government envisaged a comprehensive group insurance scheme including Parametric Insurance and Indemnity Insurance for Below Poverty Line (BPL) families that includes parametric insurance and indemnity insurance. The Government gave inprincipal approval for implementing this comprehensive group insurance scheme vide GO (Ms) No.6/2026/P&EA dated 26-02-2026.