The Asian Development Bank (ADB) has recommended Pakistan to introduce mandatory disaster insurance for residential areas, further adding, that a flat disaster insurance charge could also be either included in utility bills or added as a surcharge to property tax bills. Recent times have seen Pakistan increasingly exposed to natural hazards the likes of floods, cyclones, droughts and earthquakes. This increase in natural calamities over the last 15 years has caused disastrous losses of lives, damage to the country’s economy, and the reversal of its development gains. Financing disasters is a grave challenge for the government, which estimates floods alone to cause losses between three and four per cent of its Gross Domestic Product (GDP) every year. Natural disasters caused financial losses of around $18 billion between 2005 and 2015 in Pakistan, according to the World Bank. A comprehensive assessment report ‘The Enabling Environment for Disaster Risk Financing in Pakistan’ by ADB revealed that the country does not have any comprehensive assessment of its disaster risks. No detailed map of national hazards including earthquakes, floods, and droughts exists. While the public and private infrastructure exposed to natural hazards have not been comprehensively quantified, weather-related data is also very limited. With only 30 per cent of public assets insured, that too, only during the construction phase, the government has very limited sovereign risk transfer mechanisms. Not only does the report highlight weaknesses in Pakistan’s disaster risk management, but it also identifies its over-reliance upon post-disaster budgetary reallocations as well as international assistance to fund post-disaster response efforts for major disasters. Natural disasters caused losses of over $18 billion between 2005 and 2015: World Bank It noted that both federal and provincial governments lack a financial strategy to manage the fiscal consequences of natural disasters and a small number of solutions, including disaster-related insurance, reinsurance, and capital market’s fixes, are available for the agricultural sector. To resolve these issues, the ADB recommended that Pakistan should develop a comprehensive National Disaster Risk Financing (DRF) strategy based on a detailed model of the country’s disaster risk model. The government should also develop a comprehensive valuation of provincial and federal government-owned-infrastructure and consider mandatory disaster insurance for the residential property. An agricultural insurance pool should also be considered. The government has been asked to actively partake this scheme with financial assistance to facilitate its people. Instead of levying additional taxes, it would do well by encouraging people to buy disaster insurance through schemes, which include participation in the claims payments in the case of extreme events. The government should also consider the provision of underwriting and claims payment capacity through the state-owned insurance and reinsurance companies, and give out incentives like property and income tax rebates to the target population to stimulate the uptake of the compulsory insurance scheme. In addition, conducive measures, including stricter enforcement of building codes, also remain important to complement the proposed insurance scheme. The ADB postulated that in the past, even after making insurance such as motor third-party liability legally mandatory, only limited enforcement of the law is seen and the motor third-party liability insurance still remains almost nonexistent. It would, therefore, be particularly challenging for the government to ensure implementation of the disaster risk insurance. All fire insurance policies should also include a compulsory cover for natural hazards. A mandatory television fee is already added to monthly electricity bills. A flat disaster insurance charge could similarly be included in utility bills or added as a surcharge to property tax bills. The government could initially cover floods or earthquakes and gradually extend it to include other natural hazards, such as tropical cyclones. Published in Daily Times, February 19th 2019.