Key Details
The OECD brief Fostering Micro-Disaster Risk Finance in Emerging Asia, brings together regional disaster losses, evidence on insurance coverage and the emergence of smaller financing instruments.
Disaster damage: Emerging Asia recorded US$685 billion in disaster-related damage during 2010–2024.
India’s crop insurance reach: India’s Pradhan Mantri Fasal Bima Yojana (PMFBY) covered about 37.5 million people in 2023—88% of the 42.5 million people covered by agricultural microinsurance products reported in a 37-country survey.
Role of subsidies: 58% of the agricultural products in that survey received some subsidy; those products accounted for 97% of people covered.
Smaller catastrophe bonds: 24 bonds of US$5 million or less were issued globally during 2020–2025. They remain a niche instrument.
National Insurance Can Reach Millions While Local Losses Remain Exposed
In Fostering Micro-Disaster Risk Finance in Emerging Asia, the OECD finds that most disaster losses in the region remain uninsured. After a disaster, households may lose income or assets, small firms may struggle to reopen, and local authorities may need funds for immediate recovery.
The brief cites India’s PMFBY to show the scale a national, publicly supported agricultural scheme can achieve. The underlying Microinsurance Network survey identifies PMFBY as covering 37.5 million people in 2023. Its figures come from participating insurance providers; India’s 88% share is a share of agricultural coverage reported in that survey, not of all farm or disaster insurance worldwide.
Better Local Data Can Bring Payouts Closer to Losses
Micro-disaster insurance is designed for the risks faced by households, farmers or small businesses in a particular area. Some policies pay automatically when a predefined condition, such as a rainfall threshold, is met. This can make funds available quickly.
A poorly chosen trigger can also miss people who suffer damage. Insurers call this basis risk—the gap between an actual loss and the payment a policy produces. The OECD argues that local hazard data and community participation can help reduce that mismatch.
Small Disaster Bonds Are Possible, but Still Uncommon
A catastrophe bond transfers a specified disaster risk to investors, with funds made available if an agreed trigger is met. Smaller bonds could potentially serve a city, community or sector whose needs are too limited for a conventional large issuance.
The OECD treats micro-catastrophe bonds as an emerging option, not an established solution for India. Their usefulness would depend on reliable risk data, manageable transaction costs and triggers that reflect local damage.
Policy Relevance
India’s crop insurance experience shows that public support can expand reach. It does not reveal which other disaster losses—such as damage to homes, small businesses or local services—remain without timely financial protection. Identifying those gaps is the starting point for considering locally designed cover.
The decisive test is whether money arrives when losses occur. For insurance based on a weather or hazard trigger, coverage numbers alone cannot show this; payout records and local loss data must be compared. Any proposal for smaller catastrophe bonds would face the same question, alongside its cost relative to other ways of financing recovery.
Follow the Full Policy Brief Here: OECD: Fostering Micro-Disaster Risk Finance in Emerging Asia