Kolkata: About 650 Kolkatans have recently bought short-term ‘climate-change' policy — parametric policy in insurance jargon — that has been rolled out by a private insurer. A second private player and a PSU insurer are also set to launch such policies soon.

Aimed at house owners, office-goers, auto and cab drivers, shop owners, delivery agents, home service professionals, gig workers and event attendees, these policies seek to compensate customers for climate-related income loss.The climate risks include extreme heat, cold waves and excessive rainfall, and the policies cover increased living costs due to higher electricity use, unexpected commute cost, reduced sales due to extreme weather, supply chain delays due to flooding, leaks from prolonged rainfall, accidents caused by excessive rain, loss of income for daily wage workers and event cancellations due to adverse weather.Bajaj Allianz General, the first off the block, has separate heat, rain and cold index policies under its climate-change category. In Kolkata, it is primarily focusing on the heat index product and has received very good response. Climate experts say Bengal — and Kolkata in particular — is among the most climate-vulnerable regions in India due to its unique geography, dense population and rapid urbanisation. The state faces a high risk of cyclones, floods and extreme heat events, says Sanjay Vashist, who is part of a panel entrusted with drafting Kolkata's Climate Action Plan.

ICICI Lombard is also likely to introduce its climate products in the state soon while PSU insurer National Insurance will roll out ‘parametric' policies in Kolkata and a few other vulnerable cities. Elaborating on the need for climate change products, MD & CEO of Bajaj Allianz General Insurance Tapan Singhel said, "Climate change is no longer a distant threat. It is a reality that affects our daily lives in visible and often disruptive ways.

From flight cancellations due to extreme weather to delays in logistics, supply chains and daily commutes, the financial and emotional toll of climate-related events is steadily increasing.

"Partha Roy of Northern Avenue, among those who have bought a heat index policy, said his decision was prompted by the five-digit electricity bill that he received for May. Ashish Agarwal, agri business head at Bajaj Allianz, said they had sold close to 650 heat index product in Kolkata so far.

For these products, policy duration is from one day to one month and has to be purchased three days ahead of the risk date or the week or month, he said.A company official explained, "For a particular location, we depend on IMD data for the past 30-35 years to arrive at a ‘trigger point'. In big cities like Kolkata, different locations may have different trigger points. Real-time climate data is used to determine payouts.

When predefined conditions are met, the policyholder receives payout without the need for a lengthy claims process."Gaurav Arora of ICICI Lombard pointed out that parametric insurance products would soon be a lifeline for many as these would mitigate financial hardship faced by those insured from extreme weather conditions. Ashok Kumar Lahoty the appointed actuary at National Insurance said their parametric policy was already on the drawing board.