New Insurance Plan Will Pay You When Climate Events Happen
Insurance companies in India are finding new ways to help people deal with unpredictable weather events that can damage property and livelihoods. According to Business-Standard and PTI, New India Assurance, one of India’s largest insurers, has announced a groundbreaking insurance product that works differently from traditional policies most Indians are familiar with.
Girija Subramanian, Chairman and Managing Director of New India Assurance, revealed that the company will launch a parametric insurance product by the end of May 2025 that will provide financial protection against climate risks.
How This New Insurance Works Differently
Traditional insurance usually pays you only after you prove damage has occurred to your property, which can take weeks or months. Parametric insurance works in a completely different way. Instead of waiting for damage assessment, this new approach uses measurable data to trigger automatic payments.
“Climate change affects so many things. So normally, this kind of parametric covers are based on thresholds. Once the threshold is breached, the claim is paid,” explained Girija Subramanian in his statement.
This means when certain measurements like rainfall amounts, wind speeds, or flood levels reach predefined levels, you automatically receive payment—even if your property hasn’t been physically damaged yet.
- Traditional insurance requires you to file a claim, wait for an inspector to visit, assess damage, calculate repair costs, and then eventually receive payment—a process that can take months when disasters affect many people simultaneously.
- Parametric insurance simplifies this process dramatically by using data from trusted sources like the India Meteorological Department (IMD). If rainfall exceeds 300mm in 24 hours in your area, for example, you would automatically receive your payout without filing complex claims.
- Claim settlement happens much faster because there’s no need for property inspection or damage assessment—the trigger is simply whether the measurement threshold was crossed, which can be verified using public data.
Why This Matters For Indian Families and Businesses
Climate change is making extreme weather events like floods, droughts, and cyclones more common across India. For farmers, small business owners, and families, these events can be financially devastating.
The new parametric insurance will be available to both individual customers and businesses throughout India. This means a farmer wouldn’t have to wait for crop assessment after a drought—if rainfall falls below certain levels, they would receive payment to help them recover more quickly.
For business owners, this insurance could protect against lost income when extreme weather prevents customers from reaching their shops. The quick payout helps maintain livelihoods and employment even when climate disasters strike.
Regulatory Innovation Makes This Possible
This new insurance product is possible because of regulatory changes at the Insurance Regulatory and Development Authority of India (IRDAI). New India Assurance has registered this as a “use and file” product.
The “use and file” approach allows insurance companies to launch innovative products without waiting for lengthy pre-approval processes. Previously, insurers had to get approval before offering new products (“file and use”), which slowed innovation.
Under this newer system, the insurance company takes responsibility for ensuring the product meets all requirements. The company’s Product Management Committee and senior management must conduct due diligence and ensure compliance with regulations to protect policyholders.
Financial Context Behind This Launch
This new product comes at a challenging time for New India Assurance, which recently reported a 2% drop in net profit to Rs 347 crore in the fourth quarter of 2024-25. For the full fiscal year, profits fell by 12.49% to Rs 988 crore.
The parametric insurance launch appears to be part of the company’s strategy to find new growth opportunities in a changing market. By offering innovative products that address emerging risks like climate change, the company aims to create new revenue streams.
What This Means For You
If you live in an area prone to floods, droughts, or other climate risks, this new type of insurance could provide faster financial help when you need it most. The automatic payment triggered by weather events means you don’t have to wait for lengthy claims processes during already difficult times.
As climate change makes weather patterns more unpredictable across India, having financial protection that responds quickly to changing conditions could become increasingly valuable. This represents an important shift in how insurance works—from paying for damage after it happens to providing support when certain conditions occur.
