Cyclone Ditwah killed over 480 people and displaced 1.6 million Sri Lankans. It’s time to talk about mandatory home insurance.
The Wake-Up Call We Cannot Ignore
In late November 2025, Cyclone Ditwah tore through Sri Lanka, leaving behind a trail of destruction that will take years to recover from.
The numbers are staggering:
| Impact | Figure |
|---|---|
| Deaths confirmed | 486+ |
| People still missing | 350+ |
| People displaced | 1.6 million |
| Houses fully destroyed | 2,303 |
| Houses partially damaged | 52,489 |
| Estimated damage | $1.6 – $7 billion USD |
Kandy District alone saw 118 deaths and 171 missing. Nuwara Eliya reported 89 deaths and 73 missing. Entire neighbourhoods were buried under mud. Hospitals flooded. Supply routes severed.
“Sri Lanka’s already fragile health system is under severe pressure. Several district hospitals remain flooded and are receiving only limited supplies.”
— UN Emergency Assessment Report
And now, the familiar cycle begins again.
Waiting for assessments.
Waiting for compensation.
Waiting for the ability to rebuild.
This Is Not New. It’s Just Getting Worse.
Sri Lanka has faced this before:
- 2016 floods: 104 deaths, 99 missing, 500,000+ affected
- 2017 monsoon: 200+ deaths, hundreds of thousands displaced
- 2025 Cyclone Ditwah: 486+ deaths, 1.6 million displaced — the deadliest in decades
Each time, the pattern repeats:
Extreme weather → Massive property damage → Limited compensation → Slow recovery
The truth is uncomfortable but undeniable: Sri Lanka relies more on hope and ad-hoc relief than on a real system of protection.
The Real Question
Should Sri Lanka introduce mandatory home insurance?
The answer isn’t a simple yes or no. It depends entirely on how such a system is designed.
But one thing is clear: the conversation is now more urgent than ever.
Sri Lanka’s Insurance Gap
Here’s a sobering reality:
1.1%
Sri Lanka’s insurance penetration rate (2025)
Most homes
remain completely uninsured against disasters
A single severe event can wipe out decades of savings. Many families depend entirely on irregular government relief. This is not sustainable.
What Other Countries Do
Sri Lanka isn’t the first country to face this challenge. Here’s how others have responded:
| Country | Model | Key Features |
|---|---|---|
| Turkey | Mandatory earthquake insurance | Turkish Catastrophe Insurance Pool (TCIP) created after 1999 earthquake |
| Taiwan | Mandatory residential earthquake insurance | Covers fire, flood, landslide caused by earthquakes; uniform flat-fee premium |
| France | Mandatory, bundled | Automatically included in all home policies; government-set standard price |
| UK | Bundled, private market | Wide coverage at affordable prices through private insurers |
| USA | Optional, government-backed | National Flood Insurance Program (NFIP); required only for high-risk mortgage holders |
The lesson: Successful programs share common features — government backing, transparent pricing, and wide participation to spread risk.
The Case FOR Mandatory Home Insurance
1. Protects Families From Financial Collapse
Without insurance, families often borrow at high interest rates or postpone rebuilding for years. Insurance creates a vital safety net.
2. Reduces Government Burden
When thousands of homes are damaged, the state becomes the default insurer. A structured system spreads risk more fairly.
3. Makes Coverage Affordable Through Scale
If participation is large, premiums reduce naturally. This is the same principle behind mandatory vehicle insurance.
4. Supports Housing Stability
Insurance improves confidence for homeowners, buyers, and banks alike — strengthening the entire housing market.
The Case AGAINST Mandatory Home Insurance
1. Cost of Living Is Already High
People cannot absorb new mandatory expenses unless premiums are extremely low.
2. Trust in Insurers Is Limited
Slow claims and unclear processes have created skepticism. A mandatory system must address this first.
3. Disaster Risk Varies Significantly
A home near Kelani Ganga and a home in central Colombo cannot be priced equally. Fairness requires proper risk assessment.
4. Poor Execution Could Backfire
Mandatory insurance without transparency could become an additional financial burden instead of a benefit.
A Realistic Middle Path
Sri Lanka doesn’t need full-value mandatory coverage. What it needs is a simple, low-cost, regulated disaster protection plan focused on essential risks.
Proposed Model: Mandatory Basic Disaster Insurance
Essential Event Coverage Only:
- Flood
- Landslide
- Cyclone
- Fire
This keeps premiums affordable while covering the most destructive events.
Key Features:
- Government-regulated pricing
- Subsidies for low-income households
- Fast digital claims process
- Strict payout timelines
- Public reporting for transparency
Optional add-ons: Those who want theft coverage or full replacement value can choose additional private insurance.
Why Now Is the Right Time
Two factors make this moment unique:
1. Climate Risk Is Escalating
Cyclone Ditwah wasn’t an anomaly — it’s the new normal. Extreme weather events are becoming more frequent and more severe. Scientists project this trend will only intensify.
2. Transparency Expectations Are Rising
Sri Lankans are demanding more accountability from institutions. With improved digital systems, the country is better positioned than ever to implement:
- Fair, risk-adjusted premiums
- Real-time reporting of payouts
- Fast digital claim processes
- Robust consumer protection
A decade ago, a mandatory insurance scheme might have failed due to lack of trust. Today, the conditions are different.
Final Thoughts
Cyclone Ditwah exposed how vulnerable Sri Lanka truly is.
The push for transparency and accountability creates a rare opportunity to build a system the public can trust.
Mandatory basic home insurance, if implemented responsibly, can:
- Strengthen national resilience
- Protect families from financial ruin
- Reduce government disaster spending
- Bring stability to the housing market
The question is no longer, “Should we consider this idea?”
The real question is: If not now, when?
