Digit Insurance & KMD launch parametric cover for Delhi-NCR migrant workers

By Gloria Methri

Digit Insurance has partnered with K.M. Dastur Reinsurance Brokers (KMD) to provide one of India’s first AQI-based parametric insurance to migrant labourers affected by construction bans during excessive air pollution in the Delhi NCR region. This Digit Parametric Insurance Policy will consider claims if the daily AQI of Delhi breaches 400 beyond two strikes.

The policy will be offered to 6,200 migrant workers in the Delhi NCR region. Various government and court orders and guidelines prescribe a ban on construction activities if Delhi’s Air Quality Index (AQI) crosses hazardous pollution levels, directly affecting the livelihoods of migrant and local construction workers. This policy will directly compensate construction labourers up to Rs 6,000.

Speaking about this insurance policy, Nikhil Kamdar, Appointed Actuary, Digit Insurance, said, “We are proud to launch an innovative parametric insurance solution for vulnerable workers against wage loss caused due to construction bans triggered by Delhi NCR’s hazardous levels of air pollution. Parametric insurance is a simple, efficient and transparent way to address the financial vulnerabilities of workers caused due to environmental challenges in the region. At Digit, we keep looking at innovative parametric opportunities in different regions across different parameters.”

The claim payout will automatically trigger if the daily AQI exceeds 400 more than two times (defined as a strike). A strike would be considered to have occurred if daily AQI crosses 400 for at least 3 out of the previous 5 days. There will be a minimum gap of 25 days between each strike.

Speaking about the partnership, Ayandev Saha, Senior Vice President of K.M. Dastur Reinsurance Brokers, said, “Migrant workers are the backbone of our cities, yet they often lack access to essential social safety nets. This parametric insurance policy will help provide construction workers with financial support during environmental crises, ensuring protection against the economic impact of pollution-related disruptions. KMD, along with Digit Insurance, is committed to scaling this transformative solution by engaging key stakeholders in the real estate sector to promote adoption and inclusivity.”

In 2024, Digit Insurance also offered excess heat-related parametric insurance to women labourers in Gujarat. Parametric insurance is a type of insurance product that provides claim payouts based on the occurrence or breach of a specific event or metric (like weather, pollution levels, natural catastrophes, etc) rather than the occurrence of actual loss.

Unlike traditional insurance products like motor or health, where the claim process is longer as the individual insured is paid based on the actual loss assessed by the insurer, parametric insurance claim payout is quick and efficient. The payout is immediately triggered if a threshold or parameter (typically tracked independently) is crossed or breached.