Sri Lanka’s National Natural Disaster Insurance Scheme (NNDIS) was one of the main topics taken up at this year’s Resilience Global Partnership Forum which took place in Kotawice, Poland, during the UN Climate Conference (COP 24) this month.
On December 10, the National Insurance Trust Fund (NITF) participated at this forum held on the theme “Paving the way to effective risk financing solutions.”
The forum is the annual meeting of the InsuResilience Global Partnership for Comiate and Disaster Risk Finance and Insurance Solutions (IGP). The two co-chairs of the InsuReslience Global Partnership High-Level Consultative Group, namely Brenson Wase, Finance Minister of the Marshall Islands and Dr. Maria Flachsbarth, Parliamentary State Secretary to the German Federal Minister for Economic Cooperation and Development (BMZ) graced the occasion which was well attended by over 200 representatives of InsuResilience member institutions, including the European Union.
Approaches to promote climate disaster risk finance and insurance solutions in Pakistan, Colombia, Sri Lanka, Zambia and West Africa were discussed in five different sessions. In the Sri Lanka session, Barbara Schneil (KIW Sector, Policy Director) invited representatives of the National Insurance Trust Fund of Sri Lanka and representatives of the insurance sector to discuss innovative solutions to better protect the most vulnerable segment of the population of Sri Lanka against the consequences of climate change through the national insurance scheme.
It is now globally recognised that Sri Lanka is one of the five countries most heavily affected by natural disasters. In 2016, the Sri Lankan government established the National Natural Disaster Issuance Scheme (NNDIS) to protect its uninsured population against natural disasters.
Since its inception, the NNDIS has faced major sustainability challenges. At the Sri Lanka session, NITF CEO Sanath de Silva explained in detail the major challenges the NITF faces since the implementation of the NNDIS in 2016 and expressed the wish to improve the scheme.
The NNDIS was established to provide relief to the uninsured public affected by natural disasters without being a burden to the General Treasury, offering cover for damages to houses, business premises of micro and small enterprises with an annual turnover of less than Rs. 10 million, loss of lives and emergency relief experiences, to take care of the displaced persons, attributable to all types of natural catastrophes.
During the two years ending March 31, 2018, claims exceeding Rs. 5.5 billion have been paid by NITF under this scheme with the Treasury paying insurance premiums of Rs. 800 million to the NITF for this period.
While the government and the uninsured public have greatly benefitted by this scheme, it has exerted pressure on the NITF due to mismatch between the premium paid by the government and the cost of reinsurance cover needed to protect its balance sheet.
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