Centre-led subsidised insurance scheme can shield India’s most vulnerable

Extreme-weather events have become more frequent and intense, largely attributed to climate change. India has seen a steep rise in extreme heat events as summer temperatures regularly cross 45°C in several regions of the country. In the last three months, we have witnessed extreme floods and landslides in various parts of India, particularly the Himalayan region. Although everyone feels the heat and is hit by floods and landslides, the burden is not shared equally. For example, the millions of outdoor workers, such as construction labourers, hawkers, street vendors, sanitation workers, and rickshaw pullers, are facing life-threatening issues due to extreme heat. Similarly, people, mostly marginalised, who have been living close to the Himalayan region for decades, are facing the heat due to landslides and flash floods. 

The effects go far beyond physical discomfort. Prolonged exposure to scorching sun and high humidity severely impacts health. That leads to heat exhaustion, dehydration, and, in severe cases, heatstroke. The vulnerable section often lacks access to proper shade, hydration facilities, or medical care during working hours. Similarly, landslides and floods in the Northern region have taken lives and destroyed houses, many times, the only assets of the vulnerable section of society. However, the threat is not only to their health and assets, but also their livelihoods are at stake. Many daily-wage workers lose income when heatwaves force work stoppages or reduce working hours, and people who rely on tourism in the Himalayan region will see a significant drop in tourist flows to those locations. For someone who earns only enough to survive daily, even a few missed workdays can push an entire family into distress.

India urgently needs a safety net for those on the frontline. One promising solution is subsidised parametric insurance linked to the heat or rain indexes. The model already tested in some states and by the NGO in Kerala, but it needs to be scaled up nationwide.

The importance of the subsidised heat insurance scheme

In India, there is precedent for using insurance to protect vulnerable communities from weather-related risks. Farmers benefit from subsidised crop insurance under schemes like the Pradhan Mantri Fasal Bima Yojana (PMFBY), where specific weather events or crop losses trigger payouts. This model could be adapted for heatwave-prone workers. The insurance scheme works differently from traditional insurance. For instance, payouts are triggered automatically when a predefined weather parameter, such as the temperature or “heat index,” or “rain index”, crosses a threshold. For example, if the heat index exceeds 45°C for over three consecutive days, all registered policyholders automatically receive a payout. It has two major advantages for outdoor workers. Firstly, payments are released quickly after the triggering event. That ensures timely support during emergencies. Secondly, the trigger is based on weather station data. Thus, no need for complicated claims processes.

Case studies from Kerala and SEWA

Kerala has already implemented a heat-linked insurance program targeting vulnerable workers. Under this scheme, payouts are made when temperatures or rainfalls cross a certain threshold. That helps affected workers cope with lost income and medical expenses. The Self-Employed Women’s Association (SEWA), an NGO working with women in the informal sector, has also piloted similar insurance products.  These programs show that such insurance is feasible in the Indian context. However, they also highlight the challenges of limited coverage, small budgets, and reliance on local implementation. Without central government involvement, such initiatives cannot reach the millions who need them most.

Significance of nationwide scheme

A centrally led subsidised extreme-weather event insurance programme offers four major advantages: First, nationwide implementation allows insurers to spread risk over a larger population. That reduces overall costs and makes premiums more affordable. Second, Workers in heat-prone states like Rajasthan, Uttar Pradesh, Gujarat, and Telangana should receive the same protection as those in Kerala or Delhi. Third, the central government can negotiate better rates and ensure private insurers or public sector companies commit to affordable premiums. Finally, the program could be linked to existing social security initiatives, such as the e-Shram portal for unorganised workers, enabling easy identification and enrollment of beneficiaries.

Policy action needed

The central government has the tools, experience, and infrastructure to make this happen. India has already shown leadership in weather-linked crop insurance for farmers, health insurance for low-income people (Ayushman Bharat), and disaster relief programs. A national heatwave insurance scheme could be the next bold step in safeguarding vulnerable communities. The cost of inaction will be high—for instance, more lost lives, greater economic disruption, and rising healthcare expenses. However, the cost of action, such as subsidised premiums, weather monitoring, and public awareness, is small by comparison. Summer temperatures increase yearly, and most vulnerable workers bear the brunt alone. India has a choice to stand with them and provide protection against a threat that is no longer rare, but a regular feature of our climate reality. Subsidised parametric insurance is not a luxury but is necessary for survival in the era of climate-induced extreme weather events.

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