The Economic Survey today suggested the introduction of a new product in the capital market to provide insurance against natural calamities like earthquakes and floods.
"The instrument (catastrophe bonds) is widely used in advanced countries and there is scope for introducing it in countries like India to provide insurance against contingencies," the Survey tabled in Parliament said.
This essentially transfers insurance risk of natural calamities like earthquakes, hurricanes and floods to the capital markets through issue of catastrophe bonds, it said.
The Survey observed that capital market solutions for catastrophe risk insurance is an area that needs focus.
Such bonds are available in countries like the US, the UK and Japan.
The Survey said since the opening up of the insurance sector, the number of participants has gone up from six in 2000 to 44 at present, operating across life and non-life categories.
Insurance was opened up for the private sector in 2000 with the enactment of the Insurance Regulatory and Development Authority Act 1999.
The post-liberalisation period has witnessed tremendous growth in the insurance industry, particularly in the life segment, it said.
