Kerala Approves ₹10 Lakh Disaster Insurance for Homes in ₹120 Crore Annual Shield

The Kerala Cabinet has approved a comprehensive group insurance scheme to financially protect homes damaged by natural disasters. The scheme, cleared at a meeting chaired by Chief Minister Pinarayi Vijayan, will provide insurance coverage of up to ₹10 lakh per house and cost the state an estimated ₹120.75 crore annually.

The move comes as Kerala continues to grapple with recurring floods, landslides, and extreme weather events that have strained public finances.

Dual Insurance Model: Parametric and Indemnity

The scheme combines two models: parametric insurance and indemnity insurance, to ensure faster payouts and targeted relief.

Under the parametric model, the state will receive immediate compensation when predefined disaster triggers such as excessive rainfall, flooding levels, or wind speeds are breached. This eliminates the need for individual damage assessments, enabling quicker fund deployment for relief and rehabilitation.

The indemnity component, meanwhile, will directly compensate below-poverty-line (BPL) households for verified damage to homes and household goods. It will also cover rental assistance until repairs are completed.

Five-Year Policy to Stabilise Finances

The insurance cover will be structured for five years and will be based on the average disaster-related spending incurred by the state over the past decade. Officials said frequent natural calamities have significantly affected Kerala’s financial stability due to repeated rescue, rehabilitation, and reconstruction costs.

The plan was developed following recommendations from a committee led by Planning Board member Ravi Raman and further studies by the Rebuild Kerala Initiative.

Coverage and Cost Structure

Each insured house will receive coverage of up to ₹10 lakh, with compensation paid directly to beneficiaries after verification. The total estimated annual premium outgo of ₹120.75 crore is aimed at reducing unpredictable fiscal shocks caused by extreme weather.

Read more: NSE Issues Public Warning on Fake SEBI STT Notices, Urges Investors to Stay Alert.

Conclusion

Kerala’s group insurance scheme represents a proactive approach to climate risk management. By shifting part of the disaster burden to structured insurance mechanisms, the state aims to ensure faster relief, protect vulnerable households, and strengthen long-term fiscal resilience in the face of growing climate uncertainties.

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