Heat Insurance: The Missing Link to India's Heat Action Plans

As summers get increasingly deadly in India by the day, millions of daily wage workers are still bearing the brunt—with no compensation for lost wages. Heat insurance can help, writes EdInbox Senior Journalist Nibedita.

Nanda Kumar, 27, has to decide between health and livelihood every afternoon. After a recent bout of heat stroke that landed him in a Chennai hospital, the Ola and Uber driver now keeps away from roads between noon and 4 pm, losing up to ₹800 on a day's income. "The heat is just too much," he complains, "and there is no way to get our grievances heard by the companies."

Nanda Kumar is unfamiliar with the concept of heat insurance—but it strikes a chord. "We need it. Cases of heatstroke are widespread among us," he says. Without a platform to advocate for safer working conditions or better compensation, gig workers like him are left vulnerable and unprotected.

Across the country, Bengaluru's resident street vendor Krishna Kumar also faces the same challenge. By noon, he's compelled to shut shop as the sun is too harsh, losing half a day's income. In the lack of institutional loans, he's been compelled to take cash loans from private moneylenders, forking out ₹5,000 a month as interest on a ₹50,000 advance. "Which bank gives us loans?" he asks.

Heat Insurance for the Informal Sector

Some solutions already exist. Hasumathi Parmar, 50, a catering support worker in Ahmedabad, received relief through a heat insurance scheme launched by the Mahila Housing Trust (MHT). For just ₹354 a year, she is eligible for compensation when temperatures rise above certain thresholds—₹750 for two consecutive days above 43.7°C and ₹1,250 for above 44.1°C, with a maximum of ₹2,000 a season.

MHT, along with Global Parametrics, Go Digit Insurance, and broker Howden India, has rolled this out in a few cities. In Ahmedabad during last year, 2,000 women were each compensated ₹750 when temperatures crossed the lower threshold.

SEWA (Self-Employed Women's Association) has provided the same type of insurance to 21,000 women informal workers in seven cities. For a premium of ₹300, they can get as much as ₹2,100 per season if the temperature is more than 43.6°C on three or more days. Relief that took the shape of umbrellas, water jars, and solar lamps has now turned into financial compensation.

Why Governments Must Step In

Despite all these promising models, parametric heat insurance remains largely an NGO-led initiative with little government support. No mention of wage compensation mechanisms was noted in the heat action plans of nine Indian cities in a recent study for Sustainable Futures Collaborative.

"Private entities have adopted heat insurance in Ahmedabad, but no local or state governments," says Tamanna Dalal, co-author of the study.

Experts believe that cities will be able to implement location-based policies most effectively because heat impacts vary geographically. But some like Ulka Kelkar of World Resources Institute India prefer a national implementation. "The bigger the pool, the more sustainable the payments," she suggests. In the absence of scale, insurers will hike premiums or leave the market altogether—as occurred during California wildfires.

A three-tier system comprising private insurers, reinsurance, and government backing is crucial. Kelkar proposes this three-tier financing mechanism in order to render it sustainable.

Bridging the Insurance Gap

India still lags behind in low insurance penetration. "Most vulnerable communities lack even basic life insurance," states ICRIER's Dr. Saon Ray. She refers to Japan's earthquake insurance model—a model of public-private partnership—as a possible template.

There are also attitudinal barriers. Insurance is perceived as an investment of money, and not as a climate safety net.

In order to promote the efficiency of heat action plans, the specialists propose the following:

Involvement of insurance companies to introduce parametric heat insurance for informal workers.

Provision of budget funds for compensating lost income on the days of intense heat.

Financial triggers through heat signals and periods of rest.

As the planet heats and summers get longer, the talk of climate resilience must include financial resilience. Heat insurance may be that missing piece of the puzzle that turns India's short-term mitigation into long-term adaptation.