In 2023, natural disasters caused unprecedented economic losses of $12 billion (₹1 lakh crore) in India, according to a Swiss Re report. The year saw devastating floods and tropical cyclones (TCs) Biparjoy and Michaung, far surpassing the decade’s annual average of $8 billion in losses.
Cyclone Biparjoy, a Category 3 storm, made landfall in Gujarat’s Kutch region on June 16, 2023, causing widespread destruction. Strong winds, heavy rainfall, and storm surges shut down major ports, including Kandla and Mundra, while neighboring Maharashtra and Rajasthan also suffered damages.
Chennai Battered by Cyclone Michaung
Cyclone Michaung struck Chennai on December 5, 2023, bringing torrential rains that inflicted heavy economic losses on Tamil Nadu.
Between July 10-15, 2023, northern India faced catastrophic floods due to monsoon rains, severely impacting Himachal Pradesh, Shimla, and even Delhi. Floods accounted for 63% of India’s annual natural catastrophe losses, with monsoon depressions driving extreme rainfall.
The report highlights that Gujarat, Maharashtra, and Tamil Nadu, which together contribute nearly 37% of India’s industrial output, are hotspots for natural disasters. Ahmedabad, Mumbai, and Chennai face risks from floods, cyclones, and, in some cases, earthquakes. Delhi and its NCR region are equally vulnerable, particularly to flooding and seismic activity.
Swiss Re warns that over 90% of India’s population, households, and businesses are underinsured against natural disasters, amplifying financial vulnerabilities. The report suggests a three-step approach:
- Granular Risk Mapping: Identifying high-risk hotspots.
- Advanced Risk Assessment: Leveraging detailed models for risk accumulation.
- Reinsurance Solutions: Designing programs to close protection gaps.
Historical Context of Flood Losses
Major events like the Mumbai floods (2005) and Chennai floods (2015) rank among India’s costliest disasters, causing losses of $5.3 billion and $6.6 billion, respectively, in adjusted 2024 values.
As India’s economy grows, disaster risks intensify, especially in industrial hubs with dense populations and critical infrastructure. Strengthening resilience through insurance and proactive planning is vital to mitigate future economic shocks from natural catastrophes.
The report serves as a wake-up call for comprehensive disaster management, underscoring the need for preparedness and financial safeguards in a changing climate.