Paper on
Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India
January 2015
Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India
January 2015
Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 2 of 39
Title: Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India
Prepared under the Humanitarian Research and Innovation Grant Programme – 2013-2014
Supported by United Nations Office for the Coordination of Humanitarian Affairs
Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 3 of 39 Contents
1. Background ...... 5
2. Disaster Risk and Climate Change: Context in South Asia and Odisha ...... 7
2.1 Coastal and Marine Risks ...... 8
2.2 Climate Change and Disaster Risk ...... 8
3. Disaster Insurance: Concept, History and Pilot ...... 9
4. Disaster Insurance in Odisha ...... 12
5. About Cyclone Phailin ...... 16
6. Measuring Impact of a Disaster Microinsurance-The Research Study ...... 17
6.1 Research Background ...... 17
6.2 Methodology of the Study ...... 18
6.3 Stakeholders ...... 19
7. Findings from the Study ...... 19
Parameter I- Impact of Cyclone Phailin ...... 19
Parameter II- Insurance Coverage Post Cyclone Phailin ...... 21
8. Lessons Learnt ...... 22
9. Recommendations ...... 25
9.1 Humanitarian Agencies ...... 25
9.2 Insurance Companies ...... 26
9.3 Union and State Governments ...... 27
9.4 Donors and Expert Agencies ...... 27
9.5 For HFA2 ...... 27
10. Conclusion ...... 28
Annexure: Analysis of Data ...... 29
Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 4 of 39 1. Background
The developmental dialogue has never been so focused on disasters and climate change as it has been in the present decade. Every contribution to reducing disaster and climate change risk is simultaneously a contribution toward sustainable development. At this time, there is nearly limitless thinking toward developing innovative solutions for addressing disaster and climate change risk, with microinsurance being one such innovation. In 2013, India’s then Prime Minister Monmohan Singh said, "The current systems, particularly at the national level, lack institutional incentives and do not promote mechanisms such as risk insurance and contingent credit facilities. The development of such ex-ante arrangements is particularly important because they typically serve as a primary source of immediate funding that would reduce human suffering, economic losses and fiscal pressures in the aftermath of natural disasters"1. The 13th Finance Commission also made the observation that, “financing through insurance mechanism is certainly a feasible option” for low-impact and high frequency disasters2. According to UNOCHA, in 2011, less than 5 per cent of all humanitarian aid was used for
A tale of devastation: a family that lost their house due to cyclone Phailin.
1 Statement taken from http://timesofindia.indiatimes.com/india/PM-bats-for-risk-insurance- for-disaster-affected/articleshow/20039477.cms 2 http://nidm.gov.in/npdrr/pres/ses3/pres2.pdf-pn-6 Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 5 of 39 prevention and preparedness, and those activities comprised less than 0.4 per cent of the $3 trillion spent in international aid between 1991 and 20103. This clearly shows the relevance of risk-transfer approaches, which offer an incentive for the poor and vulnerable to become self-reliant in terms of managing and sharing their own financial risks. A recent OCHA position paper has recognized the need for exploring the potential of community safety nets and risk transfer mechanisms such as micro-insurance for both DRR and adaptation4.
All India Disaster Mitigation Institute (AIDMI)5 was the first agency in India to design a combination of life and non-life disaster insurance products6 for disaster victims through public insurance companies. The Afat Vimo (disaster insurance) scheme covering 19 types of disasters was first piloted in Gujarat in 2004. In 2012, the pilot scheme was extended to the 2011 floods victims in Odisha through a project implemented by Society for Women Action Development (SWAD), with support from the Disaster Preparedness Programme of the European Commission’s Humanitarian Aid department (DIPECHO) in partnership with Concern Worldwide India.
As the results and project analysis revealed a number of useful lessons, it was decided that a deeper analysis would be helpful in producing a clearer picture of the project’s impact from the perspective of community based outcomes. A study for assessing the impact of this innovation as a community based initiative was designed and conducted. The findings from this study highlighted, as presented in this paper, a community perspective on design and improvement of disaster microinsurance product. It answers the question of how this product assisted the victims with the necessary immediate liquidity
3 United Nations Office for the Coordination of Humanitarian Affairs (OCHA) 2014, Highlights and Overview, OCHA Policy and Studies Series, Saving Lives Today and Tomorrow, Managing the Risk of Humanitarian Crises, https://docs.unocha.org/sites/dms/Documents/OCHA%20SLTTHighlights%20Web%20Final%2 0Single.pdf 4 OCHA 2014, OCHA Position Paper : Climate Change – version 4, 29 April 2014, https://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=6&cad=rja&uact=8 &ved=0CDoQFjAF&url=http%3A%2F%2Fwww.humanitarianresponse.info%2Fsystem%2Ffiles% 2Fdocuments%2Ffiles%2FOCHA_Position_Paper_CC- Apr2014_v4_clean.docx&ei=yIvAVNreBaP_ygPEkIDwCw&usg=AFQjCNHtkjvostFlzFgvMS9acX HgSV1_eg&bvm=bv.83829542,d.bGQ 5 All India Disaster Mitigation Institute (AIDMI) is a registered non-governmental organisation based in Gujarat, India. Established after the 1987–89 Gujarat droughts, AIDMI has expanded its work over the years to cover a nine types of disasters in twelve areas of India and beyond to eight countries in Asia. www.aidmi.org. 6 Referred to as microinsurance or disaster insurance Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 6 of 39 needed for re-establishing their lives. It has generated perspectives for policy makers, planners and practitioners to look for a broader and regional implication.
This paper presents a contextual comprehension of the existing regional scenario of disaster and climate change risk and how an innovation like disaster microinsurance can contribute in the broader domain of risk transfer. This is based on the above-mentioned study which deliberates the impact of community based disaster microinsurance in the aftermath of cyclone Phailin and draws up scope and possibilities for a broader regional implication.
2. Disaster Risk and Climate Change: Context in South Asia and Odisha
Disasters have been recognized as global challenge for development. Together with climate change, this has created several road blocks in different spheres of life. Physical capital has grown around the world and as
Interaction between women leaders of Phailin cyclone recovery process revealed issues of limited or no direct investments in women and their leadership by global and national authorities. a result total losses have tripled, amounting to $3.5 trillion in the last thirty years. While the majority of these losses were experienced in Organization for Economic Cooperation and Development (OECD) member countries, the
Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 7 of 39 trend is increasingly moving towards losses in rapidly growing states.7 South Asia as a region has been a hot cake for international debates and experiments on disaster and climate change risk. In addition to sharing common geographical boundaries and cultural synonymy, South Asian countries have also inherited several types of common geological and hydro- meteorological hazards. These hazards have a trans-boundary effect among South Asian states, which have witnessed numerous catastrophes resulting in loss of flora and fauna both in the region’s recent and historical past. The impacts of these hazards are found to be deep rooted, leading to a recovery time of several decades8.
2.1 Coastal and Marine Risks Surrounded by the Bay of Bengal and Arabian Sea, South Asia is endowed with a long and densely populated coastline of 12,000 Km. The coastlines of South Asia that form a part of Bangladesh, India, Maldives, Pakistan and Sri Lanka are highly prone to hydro-meteorological, seismic and manmade disasters. Along these coastlines, there are major commercial capitals of the region, as well as the homes of large numbers of poor & vulnerable persons.
2.2 Climate Change and Disaster Risk South Asia, home to one-fifth of the world’s population, has perennially been a disaster-prone region. Two thirds of the disasters the region experiences are climate related and there has been a phenomenal increase in the frequency, severity and unpredictability of disasters in recent times. The severest impacts have been visualized in terms of sea level rise leading to submergence of low-lying coastal areas and depletion of Himalayan glaciers threatening rivers that are vital for sustaining food, water, energy and environment security of the region9. This has been further aggravated by the existence of multi layered vulnerability in terms of poverty, illiteracy, mal- nutrition, and social inequality, amongst other challenges.
Odisha, as a coastal state, is exposed to all sorts of coastal hazards which have had devastating impact upon its development. The communities in
7 Forni, Marc. “Managing Disaster Risk in South Asia.” Published by the World Bank on 10/02/2013 available at http://blogs.worldbank.org/endpovertyinsouthasia/managing- disaster-risk-south-asia 8 SAARC Road Maps on Risk Management in South Asia, August, 2011 available at http://saarc-sdmc.nic.in/pdf/publications/roadmap-saarc.pdf 9 Ibid Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 8 of 39 Odisha are increasingly exposed to floods and cyclones and their marginalization continues with the advancement of climate change. Super Cyclone in 1999, Cyclone Phailin in 2013 and Cyclone Hudhud in 2014 all served to lock Odisha’s poor and vulnerable in a vicious cycle of poverty. There is therefore a need to broaden risk reduction framework and increase investment and involvement in risk transfer mechanisms for the poor of which disaster insurance forms a very crucial part.
3. Disaster Insurance: Concept, History and Pilot
Microinsurance is defined as the “protection of low-income people against specific perils (that cause vulnerability in their livelihood) in exchange for regular payment of premiums proportionate to the likelihood and cost of the risk involved.”10 Although common in developed countries, risk-transfer approaches such as insurance are not generally available in developing countries, where insurance markets are limited and not oriented towards low- income clientele. High transaction costs, the possibility of adverse selection and the need for initial investment keeps insurers away from microinsurance for disaster protection in these countries.
Access to microinsurance facilities is increasingly becoming relevant for both the vulnerable poor and humanitarian sector. Relief and compensation efforts are useful, but not enough; they do not fully compensate or adequately help the poor recover all the incurred losses. Thus, in addition to relief or compensation, victims also need access to microinsurance that protects them against natural hazards, especially those pertaining to climate. Financial services enable poor households to leverage their assets and accelerate the process of rebuilding their lives and livelihoods. This is a lesson we (AIDMI) learned from our livelihood support work, which reached 15,000 small businesses after a 2001 Gujarat earthquake. Microinsurance can help the poor in exiting from poverty and the vulnerable in reducing risk. Similarly, promotion of microinsurance as a risk reduction investment can significantly reduce the total cost of financing post disaster relief and reconstruction and work as an adaptation to climate change risk. Microinsurance and other microfinance services helped victims of disasters accelerate their recovery and diversify their livelihoods with more productive sources of income.
10 For full document refer to http://www.microsave.net/files/pdf/Microinsurance_Towards_De_Risking_Disasters_MicroSa ve.pdf Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 9 of 39 Even in a rapidly-growing country like India, the current level of insurance penetration is 3.2% (2012-13) and less than 1% in non-life (2012-13) nationally. Non-availability of microinsurance options to the poor is an issue of financial exclusion. This is an opportunity for the disaster risk reduction actors to make risk pooling and transfer more inclusive.
Ms. Nibedita Nayak, Head, State Social Welfare Board, Odisha presented the settlement cheques to the policyholders.
A few local organizations in South Asia lead microinsurance initiatives in the region. These include Basix in Hyderabad, India; Yasiru in Colombo, Sri Lanka; Proshika in Dhaka, Bangladesh; SEWA in India; and AIDMI in India, amongst others.
AIDMI is one of the pioneering organisations in Asia to design and demonstrate pilot projects on disaster microinsurance and also support the institutionalization of risk transfer within humanitarian agencies, having
Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 10 of 39 worked on this issue since 2004. The need for designing microinsurance for disaster affected victims was first revealed during a community consultation with 14 marginalized slum communities in Bhuj following the 2001 Gujarat Earthquake. AIDMI found that only 2% of those surveyed had insurance of any type.
AIDMI designed the scheme with two regulated public sector insurance companies. The partner-agent model was named the Afat Vimo (disaster insurance) scheme. The scheme covers five risks: (limited) losses of life; trade stock; livelihood assets; house; and house contents of policyholders with an annual premium of around $4.50 (including administrative charges) and a total potential benefit of $1,560 (not necessarily the maximum payout) across the various components of the coverage.
The scheme covers damages or losses stemming from a wide range of disasters including earthquake, flood, fire, cyclone, lightning strike, landslide, and others (19 types in total). The product was first sold in April 2004 covering 3,700 policy holders in Gujarat.
Afat Vimo, being a financial tool for risk sharing, reduces the policyholders' underlying risks and offers financial protection. In addition to the policy itself, the policyholders are supported with micro mitigation measures such as fire- safety, seismic-safe construction practices and business development support.
In order to support the growing demand for an evidence base on impact of microinsurance for donors, in 2009 AIDMI, in partnership with ProVention Consortium and International Institute for Applied Systems Analysis (IIASA), led a regional study in South Asia covering five organisations offering disaster microinsurance from Bangladesh, Sri Lanka and India11. A total of 1,640 disaster microinsurance clients and 531 non-insured clients were surveyed and consulted.
In summary, the study outlines that it is worthwhile to invest in microinsurance products and services in South Asia as these are reaching poor households living below the poverty line, while using unconventional means for recovering disaster losses. It is also evident that certain challenges relating to
11 For full report visit - http://www.iiasa.ac.at/Publications/Documents/XO-11-059.pdf. Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 11 of 39 claim procedures, small compensation and delay in settlement need to be resolved.
4. Disaster Insurance in Odisha Poverty in Odisha is evident: the Economic Survey Report for the 2013-14 fiscal year reveals that the poverty rate was 32.59% in 2011-1212. The repeated occurrence of climate induced disasters has further exacerbated the image of suffering in Odisha. Until recently, the tools for assisting poor victims for increasing their resilience to disasters had been very limited. However, different actors came with different models which, while effective, were often insufficiently resourced. AIDMI, recognizing its experience of implementing ‘Afat Vimo’ in other states, chose to further test this tool in Odisha. As evident elsewhere, microinsurance can break the “cycle of poverty” by providing low-income households, farmers and businesses with access to post-disaster liquidity, thus securing their livelihoods and providing for reconstruction.
For microinsurance to be successful — for the insured and for the risk bearers — many elements are important, including: simple and affordable insurance products reaching large numbers of people; stream-lined administration, including premium payment; a simplified claims procedures and verifications; and rapid delivery of benefits.
The needs assessment in Odisha13 reveals that insurance penetration among the targeted communities is very low. A majority of households (vulnerable locations and affected by floods) consulted during the needs assessment did not have any insurance protection, although a majority of them would have been interested in taking out an insurance policy in the future. The demand of coverage includes life, livelihood, cattle, accident, household equipment and health insurance. Many households reported that they would have liked more information on various microinsurance options available in the area. They also reported that insurance premium between Rs. 100-200 would be affordable to them and most trusted source for providing insurance to them would be a local humanitarian agency. Accordingly, and based on the result of the assessment, a project titled ‘Building Disaster Resilience of Vulnerable
12 For details refer to- http://pragativadi.com/top-stories/economic-survey-2013-14-poverty-rate-declined-in- odisha#.VKd5XNKsgug 13 Assessment conducted by Concern Worldwide India - 2010. Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 12 of 39 Coastal Communities’ was designed. It was facilitated by Concern Worldwide India with support from DIPECHO; implemented by Society for Women Action Development (SWAD), Centre for Youth and Social Development (CYSD), and Sabuj Sangh; with technical support provided by AIDMI.14
Many sources confirm that communities have their own coping mechanisms to respond and recover from the impact of natural disasters. Microinsurance products have become increasingly important for risk reduction in Odisha. They transfer financial risk from vulnerable individuals to the insurance market.
Based on the needs assessment, a number of actions were identified with involved agencies to achieve the objectives of risk transfer in targeted vulnerable communities. These included the development of methodology and conduct demand survey; a microinsurance scoping study; as well as capacity building and knowledge management in local languages – Bengali, Odia and also in English. The capacity building and knowledge management includes trainings on risk transfer for institutions and for communities, material on risk transfer concept and policies, consultations among stakeholders – humanitarian agencies, government, insurance companies and communities and experience sharing knowledge products. The process of designing microinsurance emphasised a consultation between insurance companies, local humanitarian agencies working directly with communities, and potential clients, especially women.
14 Process Documentation: Microinsurance for Disaster Risk Reduction (2012) AIDMI with Concern Worldwide India. https://www.concern.net/sites/www.concern.net/files/media/resource/process_documentat ion.pdf. Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 13 of 39 Based on the assessment and scoping study, it was clear that the community requires a product that provides both life and non-life insurance coverage, and for the sustainability of the project, it would be necessary for the premium to remain within the financial capacity of clients from poor and vulnerable communities. In addition, the community was also interested in saving with insurance protection. With all these opportunities and challenges,
The microinsurance clients, many from poor households, are living in flood and cyclone prone areas. The majority of clients are involved with micro livelihood production related to both farm and non-farm endeavors. partners conducted a series of consultations with Life India Corporation (LIC) and United India Insurance Company (UIIC) for implementing Afat Vimo (disaster insurance) in Odisha. The initiative reached out 950 families from the Puri district of Odisha. The Afat Vimo product was modified for Odisha communities based on the need and demand from the communities and financial capability for long-term sustainability.
Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 14 of 39 The Cyclone affects an entire family but women bear the hardest burden with no roof over their heads. Cyclone Phailin had devastated many houses and women were seen struggling with a dream of rebuilding their lost shelter.IS THERE SPECIFIC EVIDENCE TO CITE PERTAINING TO HOW WOMEN ARE AFFECTED?
Using the experience of the past HVCA (Hazard Vulnerability and Capacity Assessment), the challenges related to client selection were satisfactorily dealt with. For example, the survey data were crosschecked and verified with that of baseline and HVCA documents. The following criteria for the selection of the client during the first year of the Afat Vimo in Odisha were enumerated as follows:
Selection criteria 1. Age group: 20 to 60 2. Widow and women headed households 3. Families that have disabled persons 4. Marginalized and poor families 5. Landless laborers 6. Houses in low-lying areas (that also meet the above socio-economic criteria) 7. Families that have migrated labor member/s
The above mentioned criteria are based on consultations with insurance companies, clients and communities. While the age-group was selected as
Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 15 of 39 per the recommendation of the involved insurance companies, the rest were based on the concept and requirement of the project. Each of the clients was associated with small scale businesses and/or services.
5. About Cyclone Phailin
Cyclonic Storm ‘Phailin’ was the most intense cyclone that crossed Indian coast after Odisha Super Cyclone of 29th October 1999. There was rapid intensification of the system from 10th October morning to 11th October morning leading to an increase in wind speed from 45 knots to 115 knots. At the time of landfall on the 12th of October 2013, the maximum sustained surface wind speed in association with the cyclone was about 115 knots (215 kmph). The storm produced heavy to extremely heavy rainfall which led to floods, a strong gale wind causing large scale structural damage, and a storm surge which led to coastal inundation (IMD, 2013).15
Cyclone Phailin originated from an upper low across the Gulf of Thailand on 5 October 2013. On the 8th it became apparent as a depression in the surface pressure field across the Bay of Bengal, and overnight 8th/9th at approximately 13.2 °N, 93.4 °E with wind speeds of more than 34 kn (63 km/h) it was designated as a “tropical storm”16
The impacts of Phailin and ensuing floods affected more than 13.2 million people, left five districts of Odisha under water, and caused hundreds of millions of dollars in damage to homes, schools, crops and the fishing industry. However, early warning alerts, disseminated four days before Phailin struck land, allowed for mass scale evacuation. Ultimately, a total of nearly 1.2 million people were evacuated, resulting in the largest evacuation operation in India in 23 years. Early warning also allowed for the relocation of more than 30,000 animals. A total of 21 lives were lost as a result of the cyclone and an additional 23 lives were lost due to severe flash flooding in the aftermath of the cyclone (UNEP-Global Environmental Alert Services, 2013). Many areas of the affected districts were inundated; houses, roads and embankments were
15 For more information please refer to- http://www.imd.gov.in/section/nhac/dynamic/phailin.pdf-pn-1 16 For more information please refer to- http://www.dwd.de/bvbw/generator/DWDWWW/Content/Oeffentlichkeit/KU/KU2/KU24/b esondere__ereignisse__global/stuerme/englischeberichte/201310__PHAILIN__india,templat eId=raw,property=publicationFile.pdf/201310_PHAILIN_india.pdf-pn-2 Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 16 of 39 damaged; and drinking water ponds were contaminated. Crops worth Rs. 2,400 crore were destroyed by the cyclone (The Hindu, 2013).
6. Measuring Impact of Disaster Microinsurance-The Research Study 6.1 Research Background This study was based on the demand to understand the impact of an innovation like disaster microinsurance from a community based perspective. The other assessments for measuring the effectiveness of the product as mentioned above (in chapter 3) highlighted some strengths and areas of improvement for microinsurance. A literature review on the theme of effectiveness of disaster microinsurance shows that there is great potential for microinsurance in the field disaster risk reduction for the poor. However, the complexity and limited understanding of insurers had so far kept it from being implemented in developing countries. As highlighted in the 14th World Conference on Earthquake Engineering in October 2008, in Beijing, “Providing risk transfer and risk management The microinsurance product was perceived strategies for the bottom of the positive among clients. On areas of important pyramid has been neglected clients suggested faster process of claim settlement, and higher number of awareness by the [property and casualty] actions at field level. industry around the world. This is not due to lack of concern, but due to complexities involved in delivering a sustainable and profitable business model”.17 An event of such a disastrous
17 Shah, Pan, Li and Wagh, 2008; for complete article please refer to http://www.iitk.ac.in/nicee/wcee/article/14_S01-01-013.PDF Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 17 of 39 scale like cyclone “Phailin” provided scope for both the humanitarian world and the insurance companies to test and define a tool for both building resilience among poorest of the poor and ensuring sustainability and profitability for the larger insurance market. As a UNOCHA report says, ‘There are many examples where humanitarian response systems have been innovative, but we need to work on how best to sustain change’18. This study was also needed to investigate the role of government in sustaining the impact of microinsurance. The research question was very clear “What was the impact of Microinsurance post cyclone Phailin?” For finding the answer/s to this question a study was designed and conducted in the form of a survey with victims of cyclone ‘Phailin’ who had insured themselves under “Afat Vimo” scheme.
6.2 Methodology of the Study The methodology of the study was short and simple and particularly addressed to the research question.
6.2.1 Universe of the study: The study included insured clients under the “Afat Vimo” product in two Panchayats [villages] of Satyabadi Development Block, Puri District in Odisha. There were a total of 950 insured clients who formed the universe of the study.
6.2.2 Sample Size: A sample size of 150 was selected for the study. This was one sixth of the total size group of beneficiaries.
6.2.3 Sampling Method: Both purposive and stratified random sampling methods were used for the study. While every sixth respondent was selected as primary choice for the study, it was also seen that an equal proportion of both who made claims and those who could not make claims were included.
6.2.4 Data Collection: A questionnaire was developed for data collection with a mix of objective (Closed questions) and subjective (Open ended) questions. The questions were divided into four sections. One-to-one interviews were conducted at base locations in order to complete the
18 United Nations Office for the Coordination of Humanitarian Affairs (OCHA), World Humanitarian Summit 2016: Concept Note, Draft September 2013, https://docs.unocha.org/sites/dms/Documents/WHS%20Concept%20Note.pdf Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 18 of 39 questionnaires.
6.3 Stakeholders The study was jointly conducted by the SWAD with technical support from AIDMI. While AIDMI designed the study, methodology, data collection tool etc, SWAD conducted the study in field. The findings of the study were analyzed and technical drafting of the research report was done by AIDMI.
7. Findings from the Study
This study was unique as it used Cyclone Phailin as a “real outcome test,” thereby raising understanding of the trigonometry between community based innovation in relation to disaster risk reduction. In fact, Cyclone Phailin, as tragic as the storm was, provided an ideal example of how successful an innovation like Afat Vimo could be. The process of including coverage for marginalized populations in the field of microinsurance, as well as other sorts of micro finance services, is still limited, especially in disaster prone areas. This study reflects how much of an opportunity is presented by this segment, given the positive outcome of the results. AIDMI found it interesting to highlight both the strengths, as well as areas of improvement, through analysis which is elaborated upon in the following paragraphs.
Highlights from data analysis19: Parameter I- Impact of Cyclone Phailin Though 99% of the respondents had been affected by Cyclone Phailin, only 62% had been evacuated from their villages/houses. 78% of the total respondents lived in Kachcha houses20. Thus, considering the intensity of the cyclone and level of vulnerability based on shelter, a higher proportion of the respondents were exposed to impacts of the cyclone. 41% of the respondents reported extensive damage to shelters. Major impacts relating to livelihoods were attributed to loss of crop and shelter. Loss of labor, damage to livestock shelter, loss of livestock, loss of business, decline in sales, and loss of fisheries were found to be the major cause of worry. The highest loss suffered by one respondent was
19 For Detailed Data Analysis, Please refer to Annex 1 20 Kachcha houses are those made of bamboo, mud and clay, as well as thatched houses. Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 19 of 39 found to be Rs. 80,000.00 (approx) and the lowest was Rs. 4,000.00. On average the respondents had suffered a loss of Rs. 19, 346.67 (approx). However, given different family sizes and structures, measuring the impact of loss is subjective. The margin of loss may appear small in quantitative appearance, but the severity of the loss can be assumed from the fact that the respondents were selected from poorest of the poor, most of whom were not earning $1/per day. The study also reflects that though self-help groups (SHGs) are playing a sizeable role in lending money for livelihood regeneration post cyclone Phailin, high interest based money lenders are also playing a pre- dominant role in this regard. The loss of livelihood has been significant factor and multiplying the vulnerability and the sources for recovering the same are also very limited and exploitative in nature. 100% of the respondents agreed that their livelihood activities post cyclone Phailin had decreased. The most common reasons or contributory factors included crop loss and discontinuation of work, loss of labor, discontinuing of agriculture activities, non-availability of work,
A woman standing with her children as she collected the remains from her house which was destroyed by Phailin loss of livestock and no alternative source of income, loss of crops and no irrigation facility for winter crops, water logging in cultivable land,
Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 20 of 39 borrowing money for purchasing raw materials, and loss of daily business (sale of vegetables).
Parameter II- Insurance Coverage Post Cyclone Phailin In the study, 51% of the total respondents made claims post cyclone and 82% of those who made claims got their claim settlements within 3 months. 88% of these clients considered the claim process simple and easy and 99% of them felt that the existing premium under Afat Vimo was affordable to them. The study reflected that the claim settlement amount was mainly used by the clients for repairing shelter, purchasing seeds, purchasing medicines, and repayment of informal loans taken from various sources. The respondents have largely recognized that Afat Vimo was a very effective tool for them which assisted in meeting post disaster needs and demands. However, the respondents had suggested that awareness of products such as Afat Vimo must be increased. A number of ways were suggested by the respondents including sharing the benefits of the product in SHG meetings with local facilitators, creating awareness through street plays, and leaflet distribution. The respondents had demanded an increase in the coverage of population as others who did not have Afat Vimo suffered the most. They also suggested that a shorter timeframe for claim settlements and an increase in the claim settlement amount would have been helpful. There was greater demand from the respondents for inclusion of crops and livelihood loss under the purview of Afat Vimo. The demand for covering micro businesses was also raised by a majority of the respondents. In summary, the respondents have demanded an integrated product which caters to a wide range of risks including life, shelter, livelihood, and health.
The study has opened many important avenues for different stakeholders involved in poverty alleviation, as well as those doing business with groups at the “bottom of the pyramid”. The lessons from this study are useful for developing a future product and for scaling up the coverage. India is moving
Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 21 of 39 fast down the pathway of development and the margin for defining poverty has also been long debated. Though the poor are frequently neglected from the view point of savings, the study has brought a different picture. The trend is gradually towards deriving more benefits and increasing the size of the coverage. The premium under Afat Vimo has largely been accepted as affordable, but at the same time there was a greater demand for more compensation as the losses are becoming more frequent and are more devastating than before. Opportunities exist for all involved, from poorest of the poor to the large insurance market. However, modesty of analysis and thinking is required to judge and define how effective products can be nurtured and how new developments can be introduced. There is a need to recognize that poor have an inherent desire to rise above below poverty line. Any option that is well structured and presented is therefore bound to be a success. This study addressed the primary research question of the impact of microinsurance in post cyclone Phailin, and found microinscurance to be a successful intervention. But, it has also given rise to another question about how more, and improved, products can be implemented. Based on the results it can be argued that products must be dynamic and integrated with more elements of coverage. However, if premiums are increased significantly, they won’t be affordable to all of the excluded communities. Yet with multi-stakeholder involvement, and sharing of burden by government and non-government actors, this opens up avenues for further improvement and development.
8. Lessons Learnt
i. Building Back Lives: The study reflected that for the cyclone Phailin affected households, risk transfer decreases the need for disaster aid and offers a dignified life to the poor. It can help to break the cycle of poverty by providing low-income households, farmers, and businesses with rapid access to post-disaster liquidity, thus protecting their livelihoods and providing for reconstruction. It is a fact that 42% of the interviewed respondents under the study had suffered extensive damage due to cyclone Phailin while the remaining 58% had only minor damages. It would have been very challenging for low income groups suffering major damages to their shelter to reconstruct; relief and recovery measures from state actors would also take time and wouldn’t necessarily ensure individual coverage for varied reasons.
Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 22 of 39 However, the claims played a very important role in rebuilding their shelters and livelihood. A protection tool like Afat Vimo can help bring back the communities to where they were before the shock without dependency on relief. Cyclone Phailin affected people who received claim settlement amounts due to their enrolment with the Afat Vimo recovered faster, while other non-clients had to cope with the economic loss and damage by using parts of their savings, borrowing money from SHGs, private money lenders and relatives and relief agencies. ii. Covariant risk21: Disasters affect everyone – entire communities or regions and thus claims must be paid to all. This can be difficult for the insurer. Local, national and international stakeholders, therefore, face special challenges in ensuring the long term viability of microinsurance schemes, and developing them as an effective climate and disaster risk management tool for the poor22. A careful diversification and reinsurance with the involvement of government becomes essential for the insurer to stay solvent. The respondents are eager to get themselves involved and take higher benefits from insurance, but not all are financially capable to derive benefits from market. This innovation reflected that a combination of “Push” and “Pull” factors can be very effective in ensuring mass inclusion in benefits received, while at the same time ensuring sustainability and profitability for the market. The involvement of government is crucial through providing subsidies to poor households; determining rules for the flood insurance pool; providing subsidies to the private insurance system so that it becomes affordable to low-income households; and the provision of reinsurance by government. These actions are cost effective and worthwhile as the burden will be shared among potential actors and victims. It has been shown worldwide that access to adequate and affordable insurance as part of the larger financial inclusion program had been instrumental in building up the financial capital and productive asset base of many poor and vulnerable families and communities and the test in this regard have proved positive in this case also. The umbrella as it
21 Covariant Risk – Covariant risk arises when many farms/households in one area are adversely affected by a single phenomenon such as a natural disaster, epidemic, unexpected change in world prices, macroeconomic crisis or civil conflict. This is distinct from individual risks, which randomly affect individual households. 22 Arnold, M. (2008). The Role of Risk Transfer and Insurance in Disaster Risk Reduction and Climate Change Adaption Available at: http://ipcc- wg2.gov/njlite_download.php?id=6017 Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 23 of 39 becomes for the insured when it covers multiple aspects of loss which the victims suffer in case of a disaster like Phailin. It is interesting to see that the victims were provided with claim settlement amount based on assessment of loss and damage and thus provides specific assistance as measure of independence without being dependent or waiting for support which is not certain or sufficient. The study as a broader outcome suggests that such an innovation is instrumental in covering covariant risks of the victims and thus, creates a structure of sustainability for the poor. iii. Up scaling the scheme: It had been really the biggest hurdle so far for AIDMI and SWAD to scale up the coverage of the product. From the demand side, affordability of the premium is a key requirement for it viability. Fortunately in India, the Indian regulatory authority since 2000 has made it mandatory for formal insurance providers to increase their shares of low income clients over time. Low levels of awareness about Afat Vimo and other microinsurance, claim procedure, general mistrust against the insurance companies and uncertain future benefits are major hindrances for microinsurance uptake. The administration cost for operating agencies is another big challenge. Without the support from government and/or humanitarian donor agencies, it becomes extremely challenging to provide the scheme at an affordable premium and to large mass at different locations by operating agencies. This cannot be a onetime effort and considering the need; while the existing clients want to re-insure, there has been prevalent demand from non-clients too for the coverage, it appears really challenging how the demand can be fulfilled. It calls multiparty involvement with long-term goal and financing. The small businesses and occupations are highly exposed to loss and damage due to disasters. Generally these businesses do not receive compensation in post disaster recovery efforts. A microinsurance product specific for small businesses needs to be designed to reach out to these vulnerable businesses. The demand also needs to be studied for proper product design targeting small businesses. The poor and vulnerable families require microinsurance that covers the non-life component especially shelter and livelihood in climatic hazard prone areas (coastal, delta, river basin, high-altitude). The suggestions as put forward by the respondents reflect that coverage to crops, livestock, micro businesses, health and life in an integrated
Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 24 of 39 product form would be best suitable for serving the needs post disaster scenario. Again the question will be how such a product can be evolved. Single party cannot do this effectively. A combination of insurance companies and non-government organizations can produce the desired result through institutionalizing risk transfer. The female clients contributed effectively to the achievements made so far and building ownership and sustainability of the product. Women have been found to be more financially responsible in such actions. Participation of women in microinsurance is one of key factors towards better awareness and sustainability. Microinsurance is not a panacea for disasters. There is a need to promote long-term disaster risk reduction in conjunction with microinsurance. Microinsurance and other such protection tools for risk transfer should be promoted as part of a wider approach of climate change adaptation.
Even in situations of devastation, microinsurance serves as an instrumental backup both financially and psychologically to get life back on track.
9. Recommendations
This section outlines some of the key recommendations derived from the study:
9.1 Humanitarian Agencies i. Increasing Coverage: A huge potential for development and extension
Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 25 of 39 of coverage and benefits to the needy through increasing scale and coverage of multi-utility microinsurance products such as Afat Vimo. Need based products must be made available to different hazard prone areas of the country rather the south Asian region which the humanitarian agencies must be facilitating as a link between the insurance companies and the probable client. The role of mediator here is that of “Principal”. ii. Increasing Awareness: The study highlights that need for awareness on microinsurance products such as ‘Afat Vimo’ is still very limited among needy communities. Humanitarian agencies must take the lead in spreading community awareness about the benefits of such products. iii. Strengthening Micro Finance and MFIs- There is strong need to develop a stabilization fund for microfinance institutions to help them respond to the overwhelming demands for loans and services immediately after a disaster. The majority of microfinance programs to date in India take a supply–side and grant based approach. There is a need to help them develop a demand-driven approach and to make them self sustaining. The microinsurance policy that protect (economic) against local hazards and with combination of life and non–life coverage must be promoted and strengthen by MFI, Government and humanitarian sectors.
9.2 Insurance Companies i. Collaboration: The Insurance companies need to increase collaboration with Humanitarian Agencies for development, strengthening and up-scaling of microinsurance products like Afat Vimo. The insurance companies must focus on increasing their coverage of that segment of population who are regarded as “Bottom of the Pyramid”. ii. Rapport strengthening: It is important to combine market entrepreneurship with strong regulation and bottom–up participation of public groups for establishing credible and trusted systems that provide disaster microinsurance to the poor. iii. Claim Settlement: The insurance companies should come ahead for the effective and in time claim settlement especially related to disaster insurance that build recovery faster and safer for poor communities.
Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 26 of 39 9.3 Union and State Governments i. Relief Services: Microinsurance service cannot immediately translate into a stand–alone enterprise for successful disaster recovery. Thus, providing a range of other services for accessing basic amenities, relief, compensation and business development services, including marketing after a disaster, are crucial for the swift recovery of the poor. ii. Up-scaling: Government must come forward for designing and up- scaling microinsurance for disasters for the mass poor. Governments (Both Union and state Governments) have the mandate of “Welfare State” and required capacity to initiate and lead such innovation. Though they must be sensitized and for the same. iii. Encourage: Government must reward and encourage agencies involved in designing and promoting such innovations at the grass-root level as well as communities who are involved in such pro-active processes. Paying premium on behalf of the poorest for a specific period of time, subsidies for Insurance Companies can be few of the many encouragements that government can initiate.
9.4 Donors and Expert Agencies i. The limited study that has been conducted indicates a demand for microinsurance. It would therefore make sense to conduct a national study on demand for microinsurance. This will be a huge undertaking, but this information on demand needs to be better understood in order to identify the potential of microinsurance and upscale coverage across India. ii. Pro–poor financial risk transfer initiatives combined with risk reduction measures such as Afat Vimo remains rare in the South Asian region. There appears to be a significant potential for disaster risk management at community level through insurance. A regional study presenting risk transfer through microinsurance with focus on disaster risk management should be carried out.
9.5 For HFA2 The mid- term HFA progress report (2010-2011) shows a dismal picture of the efforts taken by private and international financial institutions to increase the
Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 27 of 39 access of the poor and vulnerable to risk transfer measures like insurance23. As coming out of the study; more efforts needs to be made in extending coverage of micro-insurance to the millions of poor in India and in the region during the life-span of HFA2. Post-2015 DRR Framework for SAARC region (HFA2) has also recommended such role for HFA2 and noted that since ‘South Asia has a large informal business sector; there is a need to develop an institutional mechanism to protect this sector from incurring losses due to disasters through enabling policies and risk management tools like micro insurance programmes’24.
10. Conclusion Thus to conclude the paper, it can be mentioned here that the study definitely recognizes the crucial role of ‘Afat Vimo’ in increasing the resilience of the poor to disasters and climate change. This has appealed to their desires and aspirations of rising above the vicious cycle of poverty. This paper has in content a respiratory for understanding the context and way out and appeals to the concerned stakeholders for strengthening their role for enhancing the resilience of the poor. The findings are indicative of many concerns that will clarify doubts regarding profitability and sustainability of a microinsurance product in the vicinity of poverty. It encourages increased coverage and constant improvement in product design and expansion.
23 CDKN 2013, Vishal Pathak with Kshitij Gupta, OPINION: Lessons from mitigating disasters in India for HFA 2, http://cdkn.org/2013/06/opinion-lessons-from-mitigating-disasters-in-india- for-hfa-2/ 24 SAARC Disaster Management Centre 2014, Post-2015 DRR Framework for SAARC region (HFA2) SDMC, http://saarc-sdmc.nic.in/pdf/hfa-2%202014.pdf Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 28 of 39 Disaster Insurance can be the bridge between two ends comprising of disaster and recovery if promoted and used effectively and sustainably. Annexure: Analysis of Data Analysis of Data (Objective) Parameter 1: Impact of Cyclone Phailin Question 1- Were you impacted by cyclone Phailin in 2013? As Cyclone Phailin was the focal concern in this survey, were first asked whether they were impacted by Cyclone Phailin. Out of the sample size selected for the survey, 99% (148) respondents said they were affected by Cyclone Phailin and only 1% (2) respondents said that they were not impacted by the same.
Question 2- Did you evacuate from your village? When the intensity of the cyclone was so high and government also respondents with all activeness, it was necessary to understand whether the selected respondents had evacuated from their houses/villages. It was found that 62% (93) respondents had evacuated their houses/villages during the cyclone while still a good majority a good majority 38% (57) did not evacuate in-spite of the warnings of intense and severe cyclone and had faced the hazard from their own houses.
Question 3- What type of house do you own? The next parameter was on identifying the type of houses
Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 29 of 39 that the respondents were having before the cyclone. It was found that 78% (117) were having “Kachcha” houses which are extremely vulnerable to any cyclonic storms, 20% (30) had “Semi Pucca” houses which are relatively less vulnerable than kachcha house while only 2% (3) respondents had “Pucca” or RCC houses. It indicates that majority of the respondents were living in vulnerable shelters so far as cyclones are concerned. If we compare this figure with that of the above while 78% were relatively more vulnerable to Phailin while only 62% had evacuated their houses. It means 16% of the respondents were highly exposed to the hazard.
Question 4-What was the condition of your house when you came back? The survey assessed the post cyclone condition of houses of the respondents. They were asked about the condition of their houses after cyclone or when they returned home, The adjacent figure shows that 1% (2) of the respondents had their houses completely destroyed, 13% (20) had suffered major damages, 27%(40) had moderate damages. It is interesting to see that majority 56% (83) had suffered minor damages while 3% (5) respondents had suffered very minor damages. If we broadly categorize the above picture, it can be seen that 41% had suffered relatively more damage than 59% who had minor and very minor damages.
Parameter II- Insurance Coverage Post Cyclone Phailin Question 5- Did you make claims post cyclone Phailin? The parameter two was designed to asses the impact of microinsurance post cyclone Phailin. The respondents were
Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 30 of 39 asked whether they made claims post cyclone Phailin. It can be seen that 51% (77) of the respondents made claims post cyclone Phailin while 49% (73) respondents did not make any claim.
Question 6- How long did it take to settle the claims? The next question was targeted to understand the time gap that was taken for settlement of claim amounts by the Insurance Company concerned. It can be seen in the adjacent figure that 57% (44) participants got the claims within three months, 25% (19) got it between two to three months, 9% (7) got the same within two months, 5% (4) between three to four months and only 4%(3) within four months time. This indicates that the claim settlement was not a lengthy process.
Question 7- Was the process of putting claim easy? Respondents who made claims were also asked whether the process for claiming the insurance benefits were easy or complicated. Majority of the respondents in this survey agreed that the insurance claim settlement process was easy as experienced by them while 12% (9) thought that the process was not easy and complicated as per their experience. However, it is an indicator of success that the Clients were largely satisfied with the claim process.
Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 31 of 39 Question 8- Did you receive facilitation support to submit your claim? When the respondents were asked whether they were provided with facilitation support for submitting their claims, 97% (75) respondents who had submitted their claims received facilitation support both from SWAD and UIIC while 3% (2) said that they had not received any facilitation support in this regard. This also indicates that the outreach of the facilitating agency was commendable a majority of respondents had recognized their support in submitting claims.
Question- 9- Do you do any kind of savings? Respondents in another category of questions were asked whether they do any kind of savings. It was found that out of total 150 respondents 77% (113) were doing savings of some sort or other while 23% (33) respondents were not involved in any sorts of practices related to savings. It is indicative that still a good number of targeted population are not having any sorts of back up financial resource to cope with disasters and emergencies. This is again very crucial for understanding that the if utilized properly the this savings habit (77%studied population) can be very effective for microinsurance companies to grab on if awareness is generated.
Question 10- Is the cost of premium is affordable for you? When respondents were asked whether the amount of premium that they were paying was affordable to them, 99% (148) respondents said that the premium was affordable to them and only 1% (2) respondents said that was not
Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 32 of 39 affordable considering their income. This survey reflects that the premium was as per the capacity of the respondents and thus the design was appropriate in-terms of premium to be paid.
Analysis of data (Subjective- Parameter I: Impact of Cyclone Phailin
Question 11- How did the cyclone impacted your livelihood activities? The respondents have agreed in cent percentage that the cyclone had impacted their livelihood. Majority of them have mentioned loss of crop and shelter as the major impact. The respondents had largely mentioned that loss of labor, damage to livestock shelter, loss of livestock, loss of business, decline in sales, loss of fisheries etc as the major damage to their livelihood. The data enumeration also highlights that loss of coconut trees and other horticultural products had also been one among the major impacts. Few of the respondents have mentioned about loss of handloom and handicraft activities like coir rope making through loss of raw materials and even markets. However, the conclusion of the findings is that in whatever source the livelihood of the respondents was dependent was affected by the cyclone.
Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 33 of 39 Figure 11-Coping mechanism for livelihood losses
Question 12- How did you cope with livelihood loss after disaster The broad analysis of the responses to this question shows that 65% (97) respondents said they borrow from SHGs and/or Money Landers, 14% (20) respondents they cope with the loss by borrowing from extended families and/or SHGs, 19%(29) respondents borrow from different sources as mentioned above and also change their livelihood activity, 1%(2) take benefit of government relief measures and 1% (2) either didn’t borrow or not responded. However, it was clear from the responses that though SHGs are playing a sizeable role in lending money high interest based money lenders are also playing a pre-dominant role in this regard.
Questions 13- Approximately how much loss did you suffer due to cyclone? The broad analysis of the approximate value lost by the respondents (150 respondents selected for the survey) due to Cyclone Phailin is Rs. 2,902,000.00 (approximately). The highest loss suffered by one respondent is Rs. 80,000.00 (approx) and the lowest is Rs. 4000.00. On an average the participants had suffered a loss of Rs. 19, 346.67 (approx). However, depending on the type of
Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 34 of 39 family and extent of capacity the loss is subjective and thus impact may vary even for the smallest amount of loss.
Question 14- Have your post-cyclone livelihood activities increased or decreased your income? How? The respondents in cent percentage agreed that their livelihood activities post cyclone Phailin had decreased. The reasons or contributory factors were manifold such as, crop loss and discontinuation of work, loss of man-day’s, discontinuing of agriculture activities, non-availability of work, loss of livestock and no alternative source of income, loss of crops and no irrigation facility for winter crops. water logging in cultivable land, borrowing money for purchasing raw materials, loss of daily business (sale of vegetables) etc. As reflected in question 3.1 as the source of livelihood itself was affected by the cyclone, it was hard to recover with the loss and thus there was a sharp decline in post cyclone livelihood activities.
Parameter II- Insurance Coverage Post Cyclone Phailin
Question 15- How did/will you use the money received? As the cyclone affected the shelters and livelihood in broad sense of all the respondents, the utilization of the money received through insurance were mainly for repairing of shelter, purchase of seeds, purchase of medicines, repayment of informal loans taken from vivid sources etc. However, if we look at the broader picture majority of the respondents used their returns for repairing the shelters while few have used for other exclusively for other purposes as mentioned above.
Question 16- How can we improve the service of insurance product? The respondents had given vivid suggestions for improvement of services of the insurance product. These are summarized below: More awareness needed for the people on insurance and its usefulness. Timely claim settlement and involving more and more people through awareness and sensitization. Sharing the benefits of the product in SHG meetings by local facilitators
Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 35 of 39 Creating awareness through street play, leaflet distribution and sharing the information to the local people and door step service delivery by the company Linking the poorest of the poor family by paying first year’s premium. Sharing with nearby villages and covering Clients from the same as they face similar risk Awareness creation by sharing the success stories in the community The claim settlement amount should be more and within specific timeframe
Question 17- What more you want to cover under the policy? The recommendations of the respondents on the above question are briefly summarized below: It should cover crop, domestic animal, business etc It should include crop insurance with agricultural equipment. The claim amount was little for repairing of the houses. The claim amount should be more. It should include livestock insurance. It also cover health related insurance Workshop and instrument should be included within asset insurance. It should cover Persons With Disability and the aid and limb that they use Small business insurance should be brought under this product Proper and through investigation by the Insurance company and compensation as per actual damage.
This suggestion if looked at in broader framework largely demanded inclusion crop and livestock insurance and increase in the claim settlement amount.
Question 18- For future, what is your plan to sustain your livelihood against climatic disasters? Respondents had been asked how they plan to sustain their livelihood against climatic disasters. Respondents had reflected some interesting plans as follows;
Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 36 of 39 Developing and adapting cash crops and transfer the risk for short term benefit through microinsurance. Developing agricultural process and multiple cropping Starting a small business for increasing income as alternative source Cultivation of drought and flood resilient crops. Increase the production of vegetable and marketing the same, construct a pucca house for storing the produce Savings in short term deposit schemes Applying for bank loans for starting diary, piggery, goat raring etc Continuing the mushroom cultivation and direct marketing. Start the non farming income generation activities and kitchen garden at homestead land Respondents were also found expecting government schemes and plans for suitable wage employment.
Question: 19- What other protection measures you think should be worked well for poor and vulnerable communities? (Separately or with insurance policy) This was the question which appealed to be more generic and demanded more openness for answer which was not bound within a limited context and thus respondents had reflected varied responses which are summarized below: Government should ensure 100 days of work through MGNREGS Increasing coverage of crop insurance and developing the water discharge and irrigation facilities Skill development training with market linkage for income generation activities Increasing and popularizing health insurance schemes and credit facilities on easy terms for starting micro-businesses Increased subsidy on pottery and facilitation of market linkages Improving access to health facilities Skill development and introduction of modern concepts and practices in agriculture
Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 37 of 39 Provision for crop wise agricultural loan from Banks Provision of insurance for migrated population Building pucca houses with appropriate government scheme Skill development training for women on farm and non-farm livelihood options Insurance for daily laborers should be included in the govt. schemes. Crop planning at GP level for supply of seeds for next crop before season Linking government schemes and services to the poorest of the poor Skill development training to be provided by govt. on new and better practices of vegetable cultivation and provisions for farmer’s exposure visit in agriculture field with good practices and for promoting adaptation
Summary of key findings: The study reflects that the claims post cyclone had contributed immensely to meeting the immediate liquidity needs of the clients. The non-client members of the community had also expressed their eagerness to receive benefits. A majority of the money received was utilized for repairing shelters and repaying immediate debt that was taken in the lean period (between occurrence of the cyclone and receipt of the claim amount). Those who were not covered had to undergo the vicious cycle again. It can also be seen that all clients are interested in renewing their insurance products. They are largely satisfied with benefits, but an increase in the claim settlement amount and immediate claim settlement were largely the areas of improvement. This study also highlighted that demand for an integrated product having different components particularly, health and crop insurance coverage were largely highlighted by the clients. There is significant scope for strengthening the linkage between the bottom of the pyramid and the larger insurance. From the demand side sufficient demand and sustainability is reflected by the above study though lack of complete awareness, unavailability of desired products, and exclusion from certain desired benefits were among major challenges found.
Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the Aftermath of Cyclone Phailin in Odisha, India 38 of 39
Paper on Measuring the Impact of a Community-based Disaster Microinsurance Innovation in the ForAftermath more informationof Cyclone Phailin contact: in Odisha, [email protected] India 39 of 39