Indian Parliament May Ignore Pollution, Insurance Companies Can’t
It is time for insurers to step in for finding solutions to pollution in India—in their own interest.
They say life imitates art. In the National Capital Region of the Republic of India, it seems to imitate black comedy. If it was not so tragic, it would be funny. In Delhi, when the air quality is declared as “poor” schools re-open and citizens celebrate. Simply because it is not “severe” anymore or no longer in a state of public health emergency, as it was for the better part of last week when nauseous air mostly laden with harmful particles generated by burnt crop residue in Punjab and Haryana filled the space.
But an emergency is no time for hard work for elected representatives. As many as 25 of the 29 MPs in a parliamentary panel attached to the environment ministry failed to show up at a meeting to discuss the issue. The Union environment minister sounded blase about the whole thing as if to give headline writers a cue: ‘Smug About Smog’.
It did not help that the relatively insignificant issue of the odd-even number-based regulation of cars in the capital seemed to be grabbing more political attention than any long-term policy measure to fix the problem that was not occurring for the first time. Inter-state buck-passing and band-aid measures such as temporarily suspending construction activity in Delhi complete the picture.
Insurance Companies Have Stakes in Pollution Concerns
Who should be worried when citizens visit doctors, buy themselves pollution masks and bring home air purifiers to find personal cures to a social ill? The logical answer to that should be: insurers. If there is anybody who has a socially beneficial vested interest in the game, they are the companies that help you face unpredictable threats to life or health by charging you a premium. Now this premium can be seen as a self-imposed tax to save you or your nears and dears when your government cannot. The other category, politicians, is for now happy with getting votes based on caste, bigotry or personality cults from those citizens who are too environmentally illiterate or helpless to bother bout the air they breathe.
Insurers prosper when claims are less and premia revenues higher and are priced based on reasonable risk.
Amid all that, there is a delicious irony in the fact that shares of health and life insurance companies have been booming in India's stock markets this year, rising by 50 to 70 per cent in a market where the Sensex is up 11%, outperforming many other sectors. This is thanks to the fact that people are paying premia in an economy of more than one billion people. The first thing most people with families buy when they get a decent income is a life insurance policy, at least to save on tax. As they grow older, health insurance joins the priority list, if employers are not already doing that.
Why Insurers Should Be Worried About Rising Pollution Levels
However, life and insurance companies seem to be acting as if it is business as usual while it is clearly not so. They need to wake up to the fact that their costs will go up, or the premia they charge their customers will have to, if they do not become part of the solution to fix the problem of air or water pollution that causes certain risks to health and life, albeit a little less visible and dramatic than road accidents or terrorism.
Insurance thrives on the business of predictable probability in an unpredictable world. Those who survive or do better help pay the claims of those who suffer. Factors like severe air pollution, water contamination and climate change disrupt the probability in ways that are not easy to measure. Insurers prosper when claims are less and premia revenues higher and are priced based on reasonable risk.
All sorts of solutions have been suggested or partially practised to stop farmers from burning their crop residue: from breeding ducks to subsidising machines that turn waste into energy, from paying farmers to curb their ways to actually arresting them. The Supreme Court, which has become a government-by-default in an age when politicians are savouring the heady joys of national pride, can only do so much. Things such as sending postcards to the PM, as Delhi's children did, or diplomatic personnel in the capital fretting over the issue are already doing the awareness bit.
Raising awareness is not enough because the real issue is finding a healthy balance in a complicated conundrum in which everything from support prices given to farmers to the cost of transporting or using waste are part of the puzzle.
Insurance Lobby Can Make a Difference
It is time for insurers to step in— in their own interest. They need to group themselves as an industry and lobby with policy-makers and governments (central and state) to find a long-term solution to the pollution crisis. They could, among other things, consider investing part of the premium money in bonds or social enterprises aimed at finding creative solutions to the crisis. Investing time and resources in designing policy-cum-finance packages that create a credible loop to dispose of waste or disperse pollutants may be a good idea. The game has just begun. If it has not already, it is about time.
(The writer is a senior journalist who has covered economics and politics for Reuters, The Economic Times, Business Standard and Hindustan Times. He tweets as @madversity. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)
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