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7) Do you think It’s time for the govt to consider Catastrophe bonds, insurance-linked securities with increasing frequency of natural calamities? Discuss in the light of recent disasters that stuck India.(250 words)

Topic: Disaster and disaster management. Issues relating to planning, mobilization of resources, growth.

7) Do you think It’s time for the govt to consider Catastrophe bonds, insurance-linked securities with increasing frequency of natural calamities? Discuss in the light of recent disasters that stuck India.(250 words)

Reference

Why this question:

The question is intended to evaluate the need for disaster management in terms of the policies directed and aimed at insuring the regions prone and often affected by disasters like that of Odisha which was recently effected by cyclone Fani causing devastation of the State in terms of loss of life, economy, biodiversity etc.

Key demand of the question:

The answer must discuss the importance of insurance with respect to effective disaster management.

Directive word:

DiscussThis is an all-encompassing directive – you have to debate on paper by going through the details of the issues concerned by examining each one of them. You have to give reasons for both for and against arguments.

Structure of the answer:

Introduction:

In a few introductory lines appreciate the need for Insurance aspect in disaster management.

Body:

  • Explain what are Catastrophe bonds? – A typical CAT or cat bonds has a maturity of three years during which the period should be a tightly defined disaster. CAT is like junk bonds in terms of riskiness and hence the high yield expected.
  • Discuss in what way insurance-linked securities with increasing frequency of natural calamities can help and provide better management aspects post disaster to restore life and economy of a region to its normalcy.
  • Suggest solutions and lessons from countries across the world using such principles in Disaster management.

Conclusion:

Conclude with way forward.