Macro level insurance for financing post disaster recovery: The case of National Disaster Insurance Policy in Sri Lanka

Gayan Wedawatta; Nadeeshani Wanigarathna; P. A. Vijekumara; Maheshi Tennakoon

doi:10.58567/cef01010002

Macro level insurance for financing post disaster recovery: The case of National Disaster Insurance Policy in Sri Lanka

Gayan Wedawatta, Nadeeshani Wanigarathna^*, P. A. Vijekumara, Maheshi Tennakoon

^*Corresponding author for this work

Civil Engineering

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Abstract

This paper evaluates the use of macro-level insurance to finance post-disaster recovery and reinstatement by investigating the case of the National Disaster Insurance policy implemented by Sri Lanka. The national scheme provided cover for all properties in the country against hazards such as flooding and provided compensation for those affected. Analysis of secondary data obtained from the organisations that managed the scheme showed that the scheme has delivered a much higher return compared to the total insurance premium paid, suggesting that the scheme has delivered a net positive benefit compared to the cost of the premium and can be considered a viable option. However, the existing secondary data did not reveal the values of other costs and indirect benefits associated with the scheme to compute a meaningful benefit-to-cost ratio. Further rigorous, evidence-based cost-benefit analysis is required to assess the cost-effectiveness of a scheme of this nature. A cost-benefit analysis approach based on an analytical hierarchy process is proposed as a possible solution to assess the cost-effectiveness of the scheme, which could be used by government organisations as an alternative, where analytical and research resources may be limited, to evaluate a range of disaster recovery financing options using stakeholder opinion.

Original language	English
Pages (from-to)	13-28
Number of pages	16
Journal	Climate Economics and Finance
Volume	1
Issue number	1
DOIs	https://doi.org/10.58567/cef01010002
Publication status	Published - 2 Nov 2023

Bibliographical note

This is an open-access article distributed under a CC BY license (Creative Commons Attribution 4.0 International), license summary available at: https://creativecommons.org/licenses/by/4.0/.

Funding Statement: The support provided by the National Building Research Organisation (NBRO), National Disaster Relief Services Centre (NDRSC), Disaster Management Centre (DMC), and the National Insurance Trust Fund (NITF) in obtaining relevant data is much acknowledged.

Keywords

Cost-benefit analysis
Insurance
Disaster preparedness
Disaster resilience
Disaster recovery
Post disaster re-construction
Flood risk management
AHP
Cost benefit analysis
CBA

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10.58567/cef01010002

G Wedawatta et al_Macro level insurance_National Disaster Insurance Policy in Sri Lanka
This is an open-access article distributed under a CC BY license (Creative Commons Attribution 4.0 International), license summary available at: https://creativecommons.org/licenses/by/4.0/
Final published version, 730 KBLicence: CC BY 4.0

Cite this

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title = "Macro level insurance for financing post disaster recovery: The case of National Disaster Insurance Policy in Sri Lanka",

abstract = "This paper evaluates the use of macro-level insurance to finance post-disaster recovery and reinstatement by investigating the case of the National Disaster Insurance policy implemented by Sri Lanka. The national scheme provided cover for all properties in the country against hazards such as flooding and provided compensation for those affected. Analysis of secondary data obtained from the organisations that managed the scheme showed that the scheme has delivered a much higher return compared to the total insurance premium paid, suggesting that the scheme has delivered a net positive benefit compared to the cost of the premium and can be considered a viable option. However, the existing secondary data did not reveal the values of other costs and indirect benefits associated with the scheme to compute a meaningful benefit-to-cost ratio. Further rigorous, evidence-based cost-benefit analysis is required to assess the cost-effectiveness of a scheme of this nature. A cost-benefit analysis approach based on an analytical hierarchy process is proposed as a possible solution to assess the cost-effectiveness of the scheme, which could be used by government organisations as an alternative, where analytical and research resources may be limited, to evaluate a range of disaster recovery financing options using stakeholder opinion.",

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note = "This is an open-access article distributed under a CC BY license (Creative Commons Attribution 4.0 International), license summary available at: https://creativecommons.org/licenses/by/4.0/. Funding Statement: The support provided by the National Building Research Organisation (NBRO), National Disaster Relief Services Centre (NDRSC), Disaster Management Centre (DMC), and the National Insurance Trust Fund (NITF) in obtaining relevant data is much acknowledged.",

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N1 - This is an open-access article distributed under a CC BY license (Creative Commons Attribution 4.0 International), license summary available at: https://creativecommons.org/licenses/by/4.0/. Funding Statement: The support provided by the National Building Research Organisation (NBRO), National Disaster Relief Services Centre (NDRSC), Disaster Management Centre (DMC), and the National Insurance Trust Fund (NITF) in obtaining relevant data is much acknowledged.

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KW - Cost benefit analysis

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Macro level insurance for financing post disaster recovery: The case of National Disaster Insurance Policy in Sri Lanka

Abstract

Bibliographical note

Keywords

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