India is preparing to take a groundbreaking step toward climate resilience with plans for a nationwide climate-linked insurance programme. The Centre has begun preliminary discussions with major insurers to design a system that guarantees quicker compensation for communities affected by floods, landslides, and heatwaves.
The scheme is based on the parametric insurance model, where payouts are automatically triggered when specific weather indicators, lllsuch as rainfall, temperature, or wind speed cross pre-set thresholds. This model eliminates lengthy claim verifications, offering near-instant relief to disaster-hit regions.
Officials from the finance ministry, the National Disaster Management Authority (NDMA), GIC Re, and leading insurers are currently exploring structure and funding options. &ldquo;We&rsquo;ve seen the frequency and severity of adverse climate events go up, and based on that, this discussion with the government also started,&rdquo; said Ramaswamy Narayanan, chairperson of GIC Re.
The initiative could also ease the Centre&rsquo;s fiscal pressure, transferring part of the risk burden from government disaster relief funds to insurers. Financing options being considered include tapping existing relief funds or introducing nominal deductions via utility bills to sustain the insurance pool.
Several states have already begun pilot programmes. In 2024, Nagaland secured India&rsquo;s first disaster risk coverage and received its first payout following excessive rainfall. Similarly, in parts of Rajasthan, Gujarat, and Maharashtra, self-employed women received micro-payouts after temperature spikes exceeded 40&deg;C for consecutive days.
As erratic monsoons, flash floods, and heatwaves intensify across India, the urgency for climate insurance grows. Experts believe the move could place India among the first major economies to adopt a national parametric insurance framework, setting a precedent for climate adaptation financing in the Global South.

India Plans Climate-Linked Insurance Scheme

Centre in talks to launch parametric insurance to ensure faster payouts after disasters

India Plans Climate-Linked Insurance Scheme

Centre in talks to launch parametric insurance to ensure faster payouts after disasters

October 7, 2025 | 18:52 IST