The estimated annual cost of the comprehensive insurance scheme for natural disasters being envisaged by the Kerala government will be ₹120.75 crore, an order issued by the Planning and Economic Affairs (RKI) Department cited.

The Cabinet recently sanctioned the insurance scheme to support those repeatedly affected by natural disasters. The amount required for the scheme will be sourced from the State Consolidated Fund and the Chief Minister's Distress Relief Fund (CMDRF) at a 1:1 ratio.

The scheme aims to reduce the financial burden on both the government and the public due to recurring disasters such as floods, landslides, coastal erosion and heavy rainfall. The government said Kerala's geographical features make it highly vulnerable to such disasters, leading to major damage to lives, property and livelihoods.

The proposed scheme has two components:

Under the Parametric Insurance model, the state will receive immediate funds if disasters like heavy rain, floods or strong winds cross fixed limits in a particular area. The money will be used for relief, rehabilitation and reconstruction work according to a Standard Operating Procedure (SOP). The coverage amount will be based on the average spending on disaster relief over the past 10 years.

The Indemnity Insurance will apply only to Below Poverty Line (BPL) families. If their homes are damaged in a natural disaster, they will receive compensation after assessment of the actual loss. The scheme will cover house damage, loss of household items and rental support until repairs are completed. The maximum insurance coverage per house will be ₹10 lakh.

Compensation will be paid directly to homeowners after verification by the insurance company and government officials, including photo and geo-tag confirmation. The government is also considering extending compulsory insurance coverage to non-BPL families in the future.

The State Insurance Department has been asked to prepare a detailed project plan in consultation with the Finance, Revenue and Disaster Management Departments, the Kerala State Disaster Management Authority and the Rebuild Kerala Initiative.

Officials have been directed to take urgent steps to finalise and implement the scheme.