Sri Lanka ranked second among countries most affected by extreme weather; Global weather events are increasingly adverse
Despite warning, poor, marginalized and the SMEs’ to lose in relief and compensation, enabling an Easter Sunday like abrupt calamity
Sri Lanka ranked second among countries most affected by extreme weather events in 2017 and is expected to see a 1.2 percent annual GDP loss by 2050 due to climate change – World Bank report Washington June 25, 2019
The National Natural Disaster Insurance (NNIDS) scheme which was acclaimed the world over, a notable good deed of the Yahapalanaya Government that helped tide over two major disasters, one at the inception in 2016 and the year after that, and several other natural calamities, is now at real risk of being made into a toothless tiger — totally ineffectual — and very probably a has-been insurance scheme, done in by alleged shenanigans of the state powers in charge.
The poor, the , marginalized and the SMEs’ (Small and Medium Enterprises) are faced with losing billions in timely distribution of relief and compensation, in a time the government coffers are depleted, and there are budget deficit pressures. This situation is due to a decision making breakdown, a repeat of an Easter Sunday like calamity. This time however the destruction could be from a Natural Catastrophe — and god help all if there is a natural disaster very imminent, with disastrous weather events threatening our paradise island, and the surroundings.
“This comprehensive climate resilience program will reduce losses to people’s livelihoods and public assets while reducing shocks on the economy,” said Idah Z. Pswarayi-Riddihough, World Bank County Director for Nepal, Sri Lanka and Maldives, speaking of the recent World Bank climate forecasting resilience program for Sri Lanka.
Laudable as this program is, the Government would stand to lose billions in taxpayer money if there is a disaster such as a flood, earthquake or a cyclone, and the State will have to foot the bill for the damage, as there is no cover and hence, no recompense. ..
Here is how the torrid tale of corruption and mismanagement unfolds: This year the authorities called for tenders for the Terrorism Cover, Whole Account Combine Retro, and NNIDS, as it is called, but have not followed through and awarded the tenders, though ‘A+’ rated reinsurance panels have been lined up by the incumbent broker since the inception of this program.
Instead, the authorities have pursued a short term renewal of the previous reinsurance tender, when prudence would only suggest taking up long term lower fixed premiums, offered and in hand in a fresh tender bid. But this opportunity has been passed up, which effectively means that the program has collapsed and would cost substantially more due to suspicious delays. There is no cover whatsoever for uninsured deserving poor, and already savaged SMEs’, that are at risk of being affected by a natural calamity such as a flood of the proportions of the 2017 disaster, or worse.
Global Insurance, Terrorism, Retro Nat Cat and Reinsurance rates are hardening now due to global losses and changing market dynamics. Any renewal delayed by even a few months will be only be at a staggering higher pricing model, for obvious reasons of ongoing current local and regional losses due to natural catastrophes.
The story follows closely on the lines of other mega insurance debacles that cost the State millions if not billions of rupees in recent times.
The NNIDS is in scale and reach and in sheer rupee terms a much broader coverage involving billions of rupees literally, protecting small businesses, which are more often than not the lifeblood of a nation’s economy.
But there seems to be a systematic onslaught aimed at destroying the NNIDS, its logical improvements and its substantial cover. Is this a sabotage of these noble good governance initiatives by mischievous elements, in a crucial election year?
The modus operandi follows closely on the pattern that was observed with regard to lapses that resulted in the Easter Sunday attacks, at least in some of its aspects: i.e: a case of calamity staring in the face, but no one being bothered.
All this comes at a time global warming and its attendant effects have greatly endangered the planet, and there are more calamities predicted, or happening at a larger scale than ever before in the history of human existence.
Asian Flood losses in 2019 alone are Afghanistan – March 2019, Iran – March/April 2019, Vietnam – May and August 2019, Pakistan – April/May 2019, Nepal – July, Bangladesh – July 2019, China – July Aug 2019. In India the entire Northern, South East and West of the country have been hit at various times this year but most recently just north of Sri Lanka. ( Kerala, Karnataka, Mumbai, Bihar.)
Despite such obvious climate calamities occurring regularly the world over, and vulnerable territories and countries looking for solutions similar to the highly successful NNIDS model in Sri Lanka, and despite Sri Lanka having experienced many of these disasters in recent times, the world acclaimed NNIDS has now been shelved, and the uninsured poor and the already challenged small businesses are all vulnerable to the vagaries of the climate.
The National Council for Disaster Management (NCDM), and ministries involved, particularly the ministry in charge of the ensuring cover, have been guilty at best of dereliction of duty, and at worst, of mischief and corruption.
There is no real reason for the cover not to be awarded to the most responsive tender after tenders were called as early as May of this year.
Not to act on the tender is in itself suspicious conduct, and a short extensions sought instead of the proper award of the tender is indeed suspicious.
Reinsurers who have had utmost faith in the Sri Lankan State actors are now baffled, and though they have offered renewal terms — have urged that new insurance be placed.
But their faith has been undermined by the actions of the ministry and the higher ups and now the entire reputation of the State apparatus is in jeopardy.It seems lessons have not been learned.
On earlier occasions the State had to intervene and pay up billions of rupees because there was similar delay in procuring the cover under the NNIDS.
Case in point was in May 2017. The NNIDS renewal was delayed, and as in the similar deals the State was engaged in a task of trying to fix the tender, so that a foreign company with dubious antecedents was given the mega bucks deal on a platter.
However, in the meantime nature intervened and there was a flood calamity in May of 2017.
Various State actors made frantic calls to the broker for renewal, after the floods.These same parties were responsible for non-submission and withholding of the actual claim position, preventing the possibility of the reinsurance exgratia, albeit with some subjectivity. Naturally the reinsurers did not want to comply because the calls were being made after the event, and lacked in a basic principle in insurance ‘ubrema fide’.
The upshot was that the State had to intervene and make good some of the claim recovery monies — 5 billion in taxpayer funds to be precise — from its own coffers.
A repeat of this fiasco possibly costing the taxpayers billions, is now on the cards due to the private agenda to enrich those having individual and proxy interests in the tenders.
This is a crime. On the one hand the poor and the uninsured, especially the small business will have nowhere to turn if a calamity happens, and will be faced with closure, or serious delays.
On the other hand the State would have to intervene and reimburse for the amount that’s not covered by insurance, and the taxpayer at large would have to foot a massive bill just because of the negligence and the corrupt intent of the officials.
Who is responsible?
The NCDM is the supreme body for disaster management in Sri Lanka under the Sri Lanka Disaster Management Act No. 13 of 2005.
H.E. the President is the Chairperson of the National Council and Hon. Prime Minister is the Vice-Chairman. The Leader of the Opposition and the Hon. Ministers in charge of the several subjects are members of the Council.
Will anybody who is not tainted by this mega corruption in the relevant offices, please stand up?
