The southwest monsoon is a seasonal wind pattern, which typically lasts from June to September and brings heavy rains to South Asia. These rains — which account for around three-quarters of the region’s annual precipitation — are vital for agriculture, water availability and the overall economy. However, in 2024 the monsoon rains were more intense than usual, leading to widespread flooding in India, Bangladesh, Nepal and Pakistan. Rain gauges across South Asia recorded unusually high precipitation totals, including in New Delhi (India), Lahore (Pakistan), Kathmandu (Nepal) and Cox's Bazar (Bangladesh) (Figure 1).
The flooding was extensive, disrupting multiple sectors, including:
Agriculture
60% of South Asia’s land area is used for agriculture, [1] making the sector particularly vulnerable to monsoon flooding. In Bangladesh, for example, the Agricultural Ministry estimated that monsoon flooding in 2024 destroyed crops worth an estimated 45 billion taka ($380 million), including 1.1 million metric tons of rice.
Industrial activity
Flooding affected industrial areas, such as Chennai and Bengaluru in India, disrupting production, services and logistics. Cotton production, which supplies South Asia’s textile manufacturers, was also impacted. The Cotton Association of India estimated that 2024 – 2025 cotton production will be 7% lower than the previous year, in part due to flood damaged crops.
Transportation
Flooding damaged roads, bridges and railways, affecting the movement of goods and people. For example, in Nepal landslides damaged 19 major roads and blocked all highways out of Kathmandu, while in Pakistan floods damaged 500 kilometers of roads and 40 bridges. [2]
Energy
Hydroelectric power plants suffered damage, leading to reduced electricity production. Nepal — which generates more than 95% of its electricity from hydropower — reported damage to 16 hydropower plants, impacting the nation's power supply.
Severe flooding in South Asia is no surprise in a warming world, with research pointing to an increase in extreme precipitation events during the monsoon season in recent years. Scientists at the Indian Institute of Tropical Meteorology, for instance, have observed a threefold increase in extreme rainfall events over central India since 1950. [3] At the same time, the timing of the monsoon has become less predictable, with both its onset and withdrawal exhibiting greater interannual variability. Climate model projections suggest these trends will continue, with future monsoons producing even heavier rainfall and greater year-to-year variability. [4]
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. In South Asia, around 80% to 90% of natural catastrophe damages are uninsured, highlighting a significant protection gap.
One solution that could help to bridge this financing gap is parametric insurance. Parametric insurance pays out based on a pre-agreed trigger threshold (e.g. amount of rainfall over a 24-hour period, measured at a specified rain gauge). This strategy bypasses the need for a lengthy loss adjustment process, which allows funds to be quickly released to the policyholder.
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.
Parametric insurance has been implemented for decades in certain sectors, for example, to cover agricultural losses where it is more commonly referred to as “weather index insurance.” In this case the indices (or “parameters”) may relate to extreme rainfall that causes flooding, soil erosion and associated crop losses. Following a qualifying event, payouts could be made to farmers directly, to some form of “aggregator” such as a farming cooperative, or even to a government ministry that has responsibility for overseeing agricultural activities. Implementing parametric insurance at various scales, alongside other risk management and financing instruments, can strengthen the financial and wider climate resilience of key sectors.
