Insuring the informal worker against the heat

Although his home is in Ludhiana, Shabbir Alam works on construction sites in Haryana. Last month, ₹1,000 appeared in his account. The contractor had enrolled him and some colleagues in a program in which they would be paid if temperatures exceeded a certain threshold. “I earn ₹800-₹1,000 a day from my job… Some of us got ₹1,000 last month, so it was helpful,” he said Hindu in a phone call.

Also read | Mapping the loophole in India’s heat crisis

Hariom, who drives a rental taxi in the Delhi-NCR region, received ₹ 2,000 in two months. “I’m glad I got it… We already have a company rule that we can avoid driving from 12pm to 4pm on very hot days, but extra money is always welcome,” he said. Hindu.

Mr Alam and Mr Hariom are among 3,925 informal workers registered in Delhi-NCR (Noida, Delhi, Gurugram, Ghaziabad and Faridabad) this year, covered by a “parametric” heat insurance product run by Jan Sahas, a non-profit whose partners include Go Digit General Insurance and the CSR arm of Godrej Properties.

Parametric insurance, which bypasses the need for policyholders to pay premiums or make claims, is tied to a predetermined trigger calculated by insurers from a historical dataset of temperature, humidity, precipitation and air quality in a region. If a day’s weather index exceeds a predetermined threshold or an index, this will trigger a payment to the worker’s account, no questions asked. Last year, out of nearly 6,000 registered workers, 722 in Noida received ₹1,000 when the city’s trigger was activated.

According to IMD’s May weather bulletin, maximum temperatures in Delhi were ‘above normal’ by at least 5°C on only a single day; This was one of the criteria for being a ‘heatwave’ day. The IMD predicts ‘above-normal’ heatwave conditions across much of India in 2026, and the World Meteorological Organization (WMO) expects El Niño, which tends to weaken the monsoon and intensify heat, to develop after July, following a summer that has pushed temperatures above 47°C in some places.

“Insurers often determine heat index payment thresholds by looking at historical weather and loss data to find the point at which extreme heat begins to cause real problems. [using correlation between heat wave, excess rainfall or AQI with health]“Like reduced productivity or health risks,” Jan Sahas Director Shailesh Acharya said in an email response through a spokesperson.

There are currently several such plans available. The Self-Employed Women’s Association (SEWA) programme, the largest of its kind, has grown from 21,000 women in Gujarat in 2023 to nearly 2.25 lakh women in seven States by 2025, paying out several hundred rupees when temperatures exceed 40°C, according to a study by the Council for Inclusive Capitalism.

No State government yet operates a heat insurance scheme for workers; Nagaland’s is the only government parametric policy that insures residents against excessive rainfall. Almost everywhere, premiums are paid not by workers but by charitable organizations.

Whether money changes behavior is a more difficult question. In a randomized trial involving 276 labor distribution workers in Delhi and Gurugram and published in the Social Science Repository Network, economists Chen, YMA Hossain and S. Sekhri found that paying 200 Indian rupees at the beginning of a heat wave allowed workers to shift their schedules to cooler parts of the day and rest. Those who received heat warning alone worked 0.8 fewer days and reported significantly more headaches and fatigue.

lack of cash

But even workers taking advantage of the plan would not pay upfront for such coverage, the authors said, and they held back not because they ignored the danger but because of a lack of cash at a time when a heat wave was forcing them to choose between health and income.

“Our goal is to promote greater accountability among industry and government stakeholders to protect workers against climate-related challenges, including extreme heat and air pollution that can result in adverse health outcomes and loss of income,” Mr. Acharya said. “Ultimately, workers should have the option to decide whether they want to continue working in extreme climates or take leave until conditions become safer and more tolerable, without having to choose between their health and income.”

Under the program led by Jan Sahas, workers receive their payments only after temperatures exceed a certain threshold, and they do not receive a specific prediction as to whether temperatures will exceed the threshold on a particular day.

Jatin Singh, founder of weather forecasting firm Skymet, which provides data for parametric plans to absorb agricultural losses, said such programs can only work with support from the government or philanthropists. “Parametric insurance has no legs of its own,” Mr Singh said Hindu. As a retail business, it can only survive if required by law, such as traffic insurance, or if a real risk pool exists, such as life and health insurance. For example, crop parametric coverage is driven by government premium subsidies worth around Rs 30,000 crore annually.

“The model doesn’t work unless someone else pays the premium,” he said.

It was published – 21 June 2026 02:01 IST