ClearMains
Insurance has traditionally depended on the past to price the future. Climate change is making that bargain harder. Floods, cyclones and extreme rainfall are altering the risks insurers thought they knew, forcing them to ask whether yesterday remains a reliable guide to tomorrow
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The Indian government has launched the National Disaster Management Authority (NDMA) to coordinate disaster response and preparedness efforts, which includes climate change mitigation and adaptation strategies.
Mains Practice Question
Critically examine the challenges posed by climate change in pricing catastrophe risks without leaving people unprotected.
250 words
Practice this in the exam hall →Prelims Practice MCQs
The Insurance Regulatory and Development Authority of India (IRDAI) is responsible for regulating which sector?
IRDAI is the regulatory body for the insurance sector, responsible for ensuring its stability and growth.
Climate risks are becoming harder to predict and insure due to which factor?
Climate risks are becoming harder to predict and insure due to alterations in the risks insurers thought they knew, such as floods, cyclones, and extreme rainfall.
Consider the following statements regarding Climate Risks and Insurance: 1. Insurance companies are now able to accurately price climate risks based on past data. 2. Climate change is making it harder for insurance to price the future based on past data. 3. The Government of India has introduced a new law to regulate the insurance sector and address climate risks. How many of the above statements are correct?
Statement 1 is false because climate change is making it harder for insurance to price the future based on past data (fact 1). Statement 2 is true because it is a direct consequence of climate change (fact 1). Statement 3 is false because there is no mention of a new law introduced by the Government of India to regulate the insurance sector and address climate risks.
Consider the following two statements: Statement-I: Climate change is making it harder for insurance to price the future based on past data. Statement-II: Insurance has traditionally depended on the past to price the future, but climate change is altering the risks insurers thought they knew. Which one of the following is correct in respect of the above statements?
Statement 1 is true because climate change is making it harder for insurance to price the future based on past data (fact 1). Statement 2 is also true because it explains why insurance is having trouble pricing the future based on past data (facts 1 and 6). Statement 2 explains Statement 1 because it provides the underlying reason why insurance is struggling to price climate risks.