CHENNAI: With Tamil Nadu becoming increasingly susceptible to climate change-driven disasters, the State on Tuesday began exploring parametric insurance as a possible new financial tool to respond faster to cyclones, floods and extreme weather events.
The idea was mooted during a meeting of the Tamil Nadu Climate Change Governing Council, chaired by Chief Minister M K Stalin.
The idea was flagged by United Nations Environment Programme India Head Balakrishna Pisupati, who pointed to the growing global use of parametric insurance in countries that are highly exposed to climate risks.
Unlike traditional insurance mechanisms, which require detailed post-disaster assessments of damage and losses, parametric insurance triggers automatic payouts when pre-agreed parameters are met, such as a specific level of rainfall, wind speed, cyclone intensity or flood depth.
Officials told TNIE that this allows funds to be released within days, or even hours, of a disaster, when they are most needed.
The discussion comes against the backdrop of a steady accumulation of climate shocks in Tamil Nadu, including severe cyclones, floods and heat stress events in recent years.
Cyclone Michaung, which caused widespread flooding in Chennai and neighbouring districts, was cited during the meeting as a reminder of how quickly extreme weather can overwhelm urban infrastructure and public services.
While the State has strengthened early warning systems and preparedness measures, senior officials acknowledged that financing remains a critical bottleneck in the immediate aftermath of disasters.
Parametric insurance, officials said, could help bridge the gap between emergency response and longer-term recovery, especially given delays and shortfalls in conventional disaster assistance.
Tamil Nadu has repeatedly pointed out that releases under the National Disaster Response Fund are meant only for immediate relief and often fall well short of the State’s assessed needs.
Over the past decade, the State has received only a fraction of the disaster aid it sought from the Centre, constraining recovery and reconstruction efforts.
In fact, Chief Minister Stalin, in his address to the Governing Council, pointed out that the State had requested a total of Rs 24,679 crore under the National Disaster Response Fund (NDRF) for major floods and cyclones since 2014–15, but the Centre sanctioned and released only Rs 4,136 crore.
According to a written reply tabled in the ongoing Lok Sabha session, the gap between what Tamil Nadu sought and what it received is most visible in years marked by severe weather disasters.
During the 2015 Chennai floods, the State sought Rs 7,955.36 crore, but the Centre released Rs 1,365.70 crore, roughly 17% of the demand. After Cyclone Vardah in 2016, only Rs 218.76 crore was released against a request of Rs 1,977.10 crore.
For Cyclone Ockhi (2017–18), the allocation dropped to an almost symbolic Rs 0.05 crore against a request of Rs 877.01 crore.
Tamil Nadu’s most recent extreme events show a similar pattern. For Cyclone Michaung in 2023–24, which triggered widespread flooding in Chennai and neighbouring districts, the State sought Rs 2,070.04 crore, but the Centre released just Rs 276.10 crore.
In 2024–25, the State sought Rs 3,074.77 crore for damages from Cyclone Fengal and received Rs 522.34 crore so far.
Senior state officials from Tamil Nadu State Disaster Management Authority said the mismatch hampers long-term recovery efforts, especially because the NDRF assistance is meant only for immediate relief and not compensation for total losses.
The State relies on these allocations to repair critical infrastructure, support affected households, and restore essential services after major climate-induced disasters.
Stalin said climate change impacts are now being felt “right in front of our eyes” and that governments can no longer afford to remain reactive.
He said Tamil Nadu has, over the past three years, focused on building prevention and adaptation mechanisms through institutional initiatives such as the Climate Change Governing Council, Green Tamil Nadu Mission, Tamil Nadu Wetlands Mission and the Tamil Nadu Climate Change Mission.
The Chief Minister also highlighted the State’s increased financial commitment to climate action, noting that Rs 500 crore has been allocated under the present government for mitigation and adaptation measures, largely from State funds.
These investments have supported programmes ranging from climate literacy in schools and cool roofing pilots to coastal ecosystem restoration and the expansion of electric public transport.