NEW DELHI (AlertNet) - Pakistan plans to roll out a national insurance scheme, making it mandatory for every citizen to be covered against risks from natural hazards, the head of the country's disaster management authority said on Wednesday.
Pakistan is highly vulnerable to earthquakes, cyclones, droughts, floods, landslides and avalanches. Devastating floods in 2010 disrupted the lives of 20 million people – many more than the 2004 Indian Ocean tsunami – and cost $10 billion.
"Pakistan is making it mandatory for the entire population to be covered against disaster risks. The idea, at the end of the day, is to cover the lives and livelihoods of the population of the entire country," said Zafar Iqbal Qadir, chairman of the National Disaster Management Authority.
"Most parts of our country are vulnerable … either to disasters, or to poverty, or to both."
Qadir, who was speaking at a regional conference on "managing the risks of climate extremes and disasters in Asia", said Pakistan's cabinet has approved the plan and his agency was working on a comprehensive risk insurance plan that would hopefully be rolled out by the end of the year.
The country had already received a $500-million World Bank loan to set up a fund to pay for the plan, he said.
Authorities also intend to tap private sector money through their corporate social responsibility schemes as well as local philanthropists, he added.
And he said a meeting held with international insurance companies to discuss the issue in Karachi last month was positive.
Last month, a major report by the United Nations said the world needed to prepare better to deal with extreme weather and rising seas caused by climate change, in order to save lives and limit deepening economic losses.
The U.N. climate panel report forecast that all countries will be vulnerable to an expected increase in heat waves, more intense rains and floods and a probable rise in the intensity of droughts.
It suggested possible strategies to help countries adapt and prepare better such early warning systems, improving building standards and preserving ecosystems such as mangroves.
Financing disaster recovery and rebuilding through micro-insurance was another tool, the report said, which would help limit the already-strained cash reserves of poor nations.
"We are considering subsidising premiums for those who can't afford and paying full premium for those who are living below the poverty line," Qadir said, adding that it was essential that those most vulnerable, who are often the poorest, were covered.
Pakistan plans to pre-negotiate payments with insurance companies and also discard the need to file claims, said Qadir, as disaster insurance would need to reach people quickly.
"The best part is that communities which are prone to disasters are currently dependent on someone to come to respond to their needs, someone to feed them and give them shelter. We would remove the dependency syndrome of communities," he said.
"We would like them to be getting (a) response, within a few hours of the disaster occurring, from the insurance world."
(Editing by Rebekah Curtis)