Daily Current Affairs : 13-August-2024
In a significant step towards safeguarding its infrastructure and economy, Nagaland has become the first state in India to adopt a Disaster Risk Transfer Parametric Insurance Solution (DRTPS). This was formalized through a Memorandum of Understanding (MoU) with SBI General Insurance. The goal is to provide financial protection for crucial infrastructure against extreme weather events over the next three years, from 2024 to 2027.
What is Parametric Insurance?
Parametric insurance is a unique form of coverage that offers a predefined payout when specific conditions or events arise. Unlike traditional insurance, which requires detailed damage assessments after a catastrophe, parametric insurance is triggered by precise parameters, such as the intensity of a natural disaster (e.g., a certain level of rainfall or wind speed). This allows for quick financial payouts, speeding up recovery efforts after extreme weather events.
Purpose and Benefits of the DRTPS in Nagaland
Nagaland faces frequent natural disasters, including floods, landslides, and cyclones, which disrupt daily life and damage critical infrastructure. The introduction of parametric insurance aims to address these challenges by providing quick financial aid when such disasters strike. The key benefits of this insurance initiative include:
- Quick Payouts: Once a disaster meets the predefined criteria, a payout is triggered without the need for prolonged assessments.
- Protection of Critical Infrastructure: The insurance will help defend vital infrastructure like roads, bridges, and power lines from the impact of extreme weather events.
- Reduced Economic Losses: By ensuring timely financial aid, the insurance helps mitigate the economic losses that typically follow natural disasters.
- Increased Resilience: The initiative strengthens Nagaland’s ability to recover quickly and rebuild stronger after disasters.
A Step Towards Financial Resilience
This initiative is significant because it sets a precedent for disaster risk management in India. As climate change leads to more frequent and severe weather events, parametric insurance is becoming an increasingly important tool for protecting vulnerable areas. By adopting this solution, Nagaland is not only securing its own future but also paving the way for other states to follow suit. The approach promises to be a model for improving financial resilience and ensuring the livelihoods of its people are protected against the growing threat of natural disasters.
Important Points:
- Nagaland is the first state in India to adopt a Disaster Risk Transfer Parametric Insurance Solution (DRTPS).
- The MoU with SBI General Insurance ensures financial protection for critical infrastructure from extreme weather events over the next three years (2024-2027).
- Parametric insurance provides predefined payouts based on specific parameters (e.g., rainfall or wind speed) rather than damage assessments.
- Benefits of DRTPS in Nagaland:
- Quick payouts after disasters, speeding up recovery.
- Protection of critical infrastructure such as roads, bridges, and power lines.
- Reduced economic losses by providing timely financial support.
- Enhanced resilience for faster recovery and stronger rebuilding after disasters.
- The initiative sets a precedent for disaster risk management in India, especially with increasing climate-related challenges.
- Parametric insurance is seen as a vital tool for protecting vulnerable areas from the growing threat of natural disasters.
Why In News
Nagaland became the first state in India to adopt a Disaster Risk Transfer Parametric Insurance Solution (DRTPS) by signing an MoU with SBI General Insurance, marking a pioneering move in disaster risk management aimed at protecting the state’s critical infrastructure from extreme weather events.
MCQs about Nagaland Pioneers Parametric Insurance for Disaster Resilience
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What is the main purpose of Nagaland adopting the Disaster Risk Transfer Parametric Insurance Solution (DRTPS)?
A. To reduce the frequency of natural disasters
B. To provide financial protection for critical infrastructure from extreme weather events
C. To increase the amount of government aid during a disaster
D. To offer health insurance to disaster victims
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What makes parametric insurance different from traditional insurance?
A. It requires a detailed damage assessment after a disaster
B. It provides a predefined payout based on specific parameters like rainfall or wind speed
C. It offers no payouts for natural disasters
D. It covers only property damage, not infrastructure damage
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What is one of the key benefits of Nagaland’s parametric insurance initiative?
A. It offers unlimited coverage for all types of natural disasters
B. It ensures quick financial payouts to help mitigate economic losses from natural disasters
C. It eliminates the need for any form of insurance claims
D. It provides insurance coverage for agricultural losses only
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Why is Nagaland’s adoption of parametric insurance significant for India?
A. It sets a precedent for disaster risk management in India
B. It is the first time that insurance has been offered to farmers in India
C. It helps to prevent the occurrence of extreme weather events
D. It focuses only on climate change issues in the region
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