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The New Insurance That Protects Indian Women During Extreme Heat

The New Insurance That Protects Indian Women During Extreme Heat

Last year India was hit by heat. Temperatures soared above 49°C (120.2°F) in some parts, setting records for March and April.

This kind of blistering heat is almost unmanageable. “Our heads feel like they’re going to explode,” said Hema, a dump worker outside Delhi The New Yorker.

Climate change has made a heat wave about 30 times more likely. And climate change, caused mainly by greenhouse gas emissions in countries richer than India, will lead to similarly dire conditions in the future.

One new way some of India’s lowest-paid women workers are trying to protect themselves is through heat insurance. Extreme Heat Income Insurance – a partnership of an organization of informal workers (Self-Employed Women’s Association, or SEWA), an insurance technology firm (Blue Marble) and a non-profit organization (Adrianne Arsht-Rockefeller Foundation Resilience Center, or Arsht-Rock) – is a microinsurance product that pays when temperatures reach a certain threshold. SEWA is the insured of the group and ICICI Bank is the insurer.

The coverage period began on May 5 and will continue until June 30. The pilot covers 21,000 women in five districts of Gujarat state, where SEWA has a large membership base. Gujarat’s largest city, Ahmedabad, suffered a devastating heat wave in May 2010, when 1,344 excess deaths were recorded. Ahmedabad has since become a global leader in protecting those vulnerable to extreme heat.

Still, even in Gujarat, which has some of the world’s most comprehensive heat warning programs, there is room for improvement. Sahil Hebbar, consultant physician at SEWA, says some members face challenges in accessing and understanding heating advice.

Workers who depend on daily wages also face tough choices about working in the heat. While agricultural workers can shift their work hours to start around 4 a.m. and finish before the heat, there is limited flexibility for construction workers, along with women who assemble products in their homes while tending to the needs of their families.

Those who want to continue working normally may not be able to. “As a result of the extreme heat, their working hours are drastically reduced,” explains Reemaben Nanavaty, director of SEWA. For example, food vendors without refrigeration may have to throw out spoiled products. SEWA members reported losing 40 to 50% of their income on the hottest days.

Extreme heat income insurance is a way to compensate for some of that lost income, rather than prevent people from working entirely on painfully hot days. There was limited time to prepare insurance for this heat, so a simplified approach was taken to determine insurance payouts. In the pilot phase, they are launched after the fact, not based on predictions. It will probably take at least a few days for the compensation to actually be received. Given the time lag and the need for daily earnings, “our members will continue to work regardless,” Hebbar believes.

But that compensation can be very useful as an income supplement during challenging times. Heena Kamlesh Parmar, a construction worker in Ahmedabad, told Reuters she would use the payment “to buy things for my house, things to eat”.

Similarly, Nanavaty says extreme heat is directly affecting the earnings of SEWA members, and “the three areas that are badly affected are health, [children’s] education and access to food.” Lower wages translate into less food, and members often can’t afford to take time off to seek medical care when the heat makes them dizzy, feverish, or convulsing. This means that “it increases further. So a very minor heat-related illness could turn into something serious.”

These major problems can include dermatological problems (for example in ship breakers who work barefoot), urinary tract infections and kidney stones (among women who become dehydrated because they do not have drinking water or toilets at work). Nanavaty believes the insurance benefits would help keep workers fed, hydrated and better able to take care of their health.

Focus groups convened by SEWA found that many members would be willing to contribute an insurance premium of 250–300 rupees ($3.02–3.63), especially if they could make payments during the heat season instead of a lump sum. The average premium in the pilot is higher than that, at approx. $10 before tax. But this is subsidized by Arsht-Rock and can be up to six payouts, for a maximum of $85. If Extreme Heat Insurance had been in place last year, payouts would have averaged $28 per person, according to Blue Marble.

As this appears to be the first ever hot insurance product for informal sector workers, SEWA had to convey the benefits to members in affordable ways. The algorithm triggers the payment based on three days of satellite temperature data, within six ten-day cycles, adjusted for each of the five districts. For example, in Ahmedabad, a three-day minimum temperature of 134°C (273°F), corresponding to an average of 44.7°C (112°F), would require payment. This may seem to be pushing the limits of endurance, but it would be in line with the expectations of SEWA members, who said in focus group discussions that working outdoors at 45°C (113°F) became a challenge for them.

Hebbar says that even for people with no prior experience in parametric insurance (insurance that doesn’t depend on proven losses), “it’s easy enough to figure out … that it’s not just a one-day temperature trigger, it’s an average of three days. And I think that’s the majority [members] were on board using the average.”

The team behind the new insurance product hopes to expand the parameters in future iterations. While currently the payout threshold only takes daytime temperatures into account, a more complex measure in the future could also take into account nighttime temperatures, humidity and health impacts. Ideally, the future version would also be based on predictions rather than reactive responses.

The viability of this type of insurance product may depend on the ability to raise additional funds. Arsht-Rock has allocated US$500,000 in technical and communication support, and is seeking additional funding to increase insurance coverage. Parametric climate insurance in low- and middle-income countries is a niche but growing field, primarily subsidized by non-profit organizations, governments or donor countries.

“In our experience, for populations new to parametric insurance, starting with subsidized products is the best approach to familiarize them with the product and build confidence in insurance as a concept,” explains Sarah Ebrahimi, Head of Institutional Partnerships at Blue Marble. and head of personal insurance. “We use a design called Smart Subsidies, where the subsidy declines over time as participants become comfortable with the product and can see the value it provides.”

Elsewhere in India, the Kerala Cooperative Milk Marketing Federation and the Agricultural Insurance Company recently launched a heat-related insurance scheme for cow and buffalo farmers, as high temperatures reduce milk production. If temperatures exceed the limit set for each area in Kerala (ranging from 33 to 37°C, or 91.4 to 98.6°F) for six consecutive days, dairy farmers receive compensation starting at 140 rupees ($1.69) .

SEWA emphasizes that its new insurance policy is one of several measures to adapt to rising temperatures. Complementary is its climate fund, a pooled savings mechanism that helps members save for items such as home insulation materials. A particularly useful adaptation that saved workers at home was the cool roofs, which Nanavaty says can reduce the temperature by several degrees.

Arsht-Rock and SEWA also provide free tents and coolers. And SEWA supports members with affordable techniques such as training them to prepare oral rehydration solution, an extremely effective way to combat dehydration, at home.

Although Extreme Heat Income Insurance hasn’t started paying out yet, 2023 is already shaping up to be a scorching hot one. Heat waves began to hit India in early March, and many are worried about how extreme this heat season will be. “We all hope it will not exceed 50°C [122°F]but the duration is definitely extended,” says Nanavaty.

Informal workers in India are finding it increasingly difficult to cope with the heat. Safety nets such as extreme heat income insurance will hopefully help protect against some of the worst effects of rising temperatures.

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