The 2024 monsoon season delivered extensive flooding across South Asia, heightening concern over the region’s vulnerability to increasingly erratic climate patterns.
In a recent analysis, WTW identified the event as emblematic of escalating risk linked to climate-driven shifts in precipitation, with significant implications for insurance coverage, economic resilience, and regional infrastructure.
The annual southwest monsoon, which typically brings essential rainfall between June and September, accounts for approximately 75% of annual precipitation in South Asia.
However, the rains in 2024 exceeded historic norms, leading to damaging floods in India, Bangladesh, Nepal, and Pakistan. Cities such as Kathmandu, Lahore, Cox’s Bazar, and New Delhi recorded higher-than-average rainfall, disrupting multiple sectors.
The data aligns with CRESTA’s report, which revealed that the insurance sector recorded US$18.2 billion in insured losses from major global catastrophes in 2024, with flooding accounting for 78% of that total – a sharp contrast to the previous year, when convective storms were the main driver.
WTW noted that agricultural production sustained heavy losses, given that farmland constitutes a major share of South Asia’s land use. Bangladesh’s agriculture ministry reported damages estimated at 45 billion taka (about US$380 million), including significant rice crop destruction.
Floodwaters also interrupted industrial operations, particularly in Indian cities such as Bengaluru and Chennai. Cotton production – a critical input for the region’s textile sector – was impacted, with the Cotton Association of India forecasting a 7% annual decline due in part to weather damage.
Transport infrastructure, another critical pillar of regional trade, faced widespread disruption. Nepal reported landslides that rendered all major routes out of Kathmandu impassable, while Pakistan’s floods damaged over 500 kilometres of roads and dozens of bridges.
Hydropower facilities also suffered. In Nepal, where renewable sources account for more than 95% of power generation, 16 hydroelectric plants were affected, reducing output and straining the electricity grid.
Long-term trends suggest that such extreme rainfall events are becoming more frequent. Research from the Indian Institute of Tropical Meteorology has identified a marked increase in high-intensity precipitation episodes over central India since the mid-20th century. Forecasts indicate that both variability and intensity in monsoon systems are likely to rise further.
Insurance coverage across the region has not kept pace. WTW noted that between 80% and 90% of economic losses from natural disasters in South Asia remain uninsured.
“For risk managers across the region, this evolving reality demands a proactive approach to safeguard communities and economies. Central to this effort is strengthening risk management and financing strategies, including the development of robust risk transfer solutions,” WTW said.
WTW highlighted parametric insurance as a key mechanism to address this gap. This model pays out based on predefined criteria – such as rainfall exceeding a set threshold – enabling quicker access to funds following a disaster.
“This strategy bypasses the need for a lengthy loss adjustment process, which allows funds to be quickly released to the policyholder,” the company said. “Additionally, parametric insurance can be used to cover non-damage losses such as those resulting from business interruption. This flexible application means that parametric insurance can be a valuable complement to more traditional indemnity-based insurance coverages.”
