Mint ·
Himalayan infra projects brace for a climate risk premium
New Delhi: The catastrophic Nepal-Tibet floods in August could make infrastructure across the Himalayas more expensive to insure, as climate change reshapes the region’s risk profile. If the past is any indication, there could be a spike coming up: insurance rates for roads and bridges had risen about 21% after the way less severe 2023 Sikkim glacial lake outburst flood (GLOF) disaster. Insurers and reinsurers are now assessing the likely rise in premiums, according to three people aware of the development.
Climate change is making infrastructure in the Himalayas increasingly expensive to insure due to the rising incidents of flash floods, landslides, and glacial lake outburst floods. The 26 August Nepal disaster has triggered brainstorming among insurers and reinsurers to work out the extent of the damage and also what it means for risks across the region, according to three people aware of the development.
Insurers say the final premium pricing for such projects in the Himalayan region will depend on the availability and cost of reinsurance capacity, against the backdrop of the latest calamity as well as the earlier ones such as the 2023 Sikkim glacial lake outburst floods (GLOFs) and the 2013 Uttarakhand flash floods and landslides pushing up premiums.
