“I grew up knowing my country was drowning” – says Anushay of Bangladesh with a sense of despair.

Bangladesh is one of the world’s worst victims to the negative impacts of anticipated climate change and is possibly most threatened by it. Though the country’s contribution to the global greenhouse emission is low, floods and other natural disasters are becoming very frequent. Its vulnerability lies in its geographic location and a very convoluted coast line. The high population density adds to the misery.

 The cause and effect relationship between disaster and socio-economic development is important, as  floods cause a lot of direct as well as indirect loss to the country’s economy.  Each year almost 18% of the country gets flooded and when severe almost 55% of the country is inundated.  90% of the water of South Asia passes through Bangladesh. The major rivers of the country are the Ganga, Brahmaputra, Padma and the lower Meghna.

Floodplains constitute about four-fifth of the land mass of Bangladesh and 68% of the land is vulnerable to floods. The country experiences three kinds of floods. There are the monsoon floods caused by heavy downpour during the rainy season. The change in the base level of rivers causes tidal surge floods. This is due to the rise of the local sea level and subsidence. Lastly, the flash floods that are caused by heavy rain associated with storms or hurricanes. Jamuna and Ganga define the eastern and southern boundary of the North West region and is bordered by several other rivers too. The intensity of flash floods is very high here.  

 Developing a sustainable insurance for a flood prone region is difficult but catastrophic floods which are rarer can be insured.  CIRM in collaboration with Institute of Water Modeling- Bangladesh and Oxfam- Great Britain is developing an index based Meso level flood insurance product for Sirajganj district located in the northwest region of Bangladesh.  IWM has developed a model that will assess the hazards caused due to catastrophic floods. The Flood Forecasting and Warning Centre (FFWC) Model was taken as the base model for the study. The Monsoon period of 2007 was considered as the base period for model development and calibration.

The “Flood Hazard Model” which will give us the scenario on flooding in Sirajganj district has been developed using the Digital Elevation Model (DEM). DEM will be represented on a 300×300metres grid. The grids will represent the amount of floods each region experiences. Other models such as MIKE 11, MIKE GIS and MIKE 11 HD will also be used.  A flood vulnerability index in terms of flood depth and duration is   prepared to produce the index base flood insurance.

The economic loss arising out of the flood will be estimated by CIRM. Pragati is the insurer, but the reinsurers are yet to be finalised. The pilot study will be done in 2011 and hopefully the misery of the people suffering due to catastrophes like floods will be reduced.

When an earthquake of magnitude 7.9 on the Richter scale hit Japan on November 15, 2006, no deaths were recorded. However when an earthquake of magnitude of 7 hit Haiti on January 12, 2010 22, 2570 lives were lost. The irony in these facts is very unfortunate but relevant for us and true.

If we are to rescue the poor and the needy from the catastrophes of the world, we need to do something substantial; something besides post-disaster care; something beyond providing the mental support; some financial backing. The global character of natural disaster is constantly changing. There are around 800 to 1000 natural catastrophes recorded every year. Statistics indicate that the frequency of disasters recorded since 1990 has gone down, but the intensity of these disasters has increased.  The people who are most affected by these calamities are the economically weak households. 30% of the population in developed countries have insurance coverage against catastrophe risk.  Only 1% and 3% of the households in the developing and least developed countries respectively have insurance coverage against catastrophe risk. These less developed economies do not have adequate infrastructural facilities.   They are caught in a vicious circle with high vulnerability, insufficient disaster management instruments and low income. This fragile infrastructure also increases the impact of the calamity when it happens. A shift from response and recovery to awareness and preparedness is a necessity.  Therefore we need to develop efficient ex-ante disaster management facilities.

It would be significant to mention here the two insurance resource pools that have been established – Turkey Catastrophe Insurance Pool (TCIP) and the Caribbean Catastrophe Risk Insurance Facility (CCRIF) which were established in the years 2000 and 2007 respectively. TCIP was established after the major earthquake which struck Turkey in 1999. It was established to mitigate the financial burden which the government faces after a calamity. The government has made it compulsory for people living in earthquake prone zones to have insurance. CCRIF is the first multi-country risk pool in the world. It provides immediate post disaster facility and medium term rebuilding efforts in the event of a disaster to its member countries. This system diversifies the risk and helps in generating economies of scale. When the earthquake struck Haiti on January 12, 2010 CCRIF made a payout of USD 7.75 million within 14 days of the earthquake.

It is important to note here that if a small country like Haiti can afford to invest in catastrophe insurance and reap the benefits of it when it is required the most, why cannot India and other developing countries also invest in catastrophe insurance?

In my next blog I will talk about CIRM’s Meso level flood insurance product developed in collaboration with Oxfam and  IWM-Bangladesh.