India's first AQI-based insurance for Delhi's construction workers is here

The policy protects 6,200 daily wage labourers against wage loss due to air pollution. The claim payout to trigger automatically if daily AQI breaches 400 beyond two strikes.

 Go Digit General Insurance (Digit Insurance) has teamed up with K.M. Dastur Reinsurance Brokers (KMD) to introduce  India’s first AQI-based parametric insurance policy. This  policy is designed to protect 6,200 migrant construction workers in the Delhi NCR region from wage loss caused by air pollution, particularly during periods when construction activities are banned due to hazardous air quality levels.

 

As air pollution in Delhi NCR regularly reaches dangerous levels, local and government authorities often impose construction bans when the Air Quality Index (AQI) exceeds a certain threshold. For workers reliant on daily wages, such restrictions directly threaten their livelihood. This innovative insurance solution aims to offer timely financial support during such disruptions.

 

 

The policy is based on the AQI parameter, and the claim payouts will be automatically triggered if the daily AQI breaches the 400 mark more than twice, indicating extreme pollution levels. A strike, in this case, is defined as a period when the AQI remains above 400 for at least three out of five consecutive days, with a minimum gap of 25 days between each strike. In the event of a claim, the affected workers will receive up to Rs 6,000 to compensate for the wage loss during such hazardous periods.

 

Instead of assessing claims based on actual losses, parametric insurance triggers a payout when a predefined event or parameter—such as an AQI threshold or a specific weather condition—occurs. This makes the claims process faster, as payouts are automatic once the set criteria are met. In contrast to traditional insurance, where an insurer assesses the extent of loss, parametric insurance provides a more streamlined, transparent, and swift resolution.

 

 "We are proud to introduce this parametric insurance solution, which is simple, transparent, and efficient. It is designed to protect vulnerable workers from wage loss during environmental crises such as pollution-related construction bans in Delhi NCR. At Digit, we are constantly exploring innovative parametric opportunities across different regions to address environmental challenges," said Nikhil Kamdar, appointed Actuary at Digit Insurance.

 

The partnership with KMD brings to light the importance of providing social safety nets for migrant workers, a group that often lacks access to such financial protections. Ayandev Saha, Sr. Vice President at K.M. Dastur Reinsurance Brokers, emphasized the need for such inclusive solutions: "Migrant workers are the backbone of our cities, yet they often lack essential social safety nets. This parametric insurance will provide crucial financial support during environmental crises, ensuring they are not left vulnerable during pollution-related disruptions."

 

This new offering is part of Digit Insurance’s broader effort to introduce parametric insurance solutions for workers affected by extreme weather and environmental conditions. In 2024, the company also launched an excess heat-related parametric insurance policy for women laborers in Gujarat.