A project to strengthen the financial resilience of flood-prone communities in Ghana has delivered two parametric insurance products -- an Excess Rainfall Cover and a Flood Footprint Product.
The launch was in response to the increasing flood risk and limited financial protection in the country, according to the Insurance Development Forum (IDF) which uses insurance and its related risk management capabilities to build resilience.
After two years in development, a consortium – comprising Allianz, Swiss Re and HKV – delivered the two parametric insurance products. Unlike traditional insurance, which pays out based on damage assessments, these parametric insurance solutions offer faster payouts based on predefined parameters – such as rainfall levels or flood severity – enabling communities to recover more quickly after flood events. The insured areas have been carefully selected to cover vulnerable households in low-income and informal settlements in Ghana’s Greater Accra Metropolitan Area (GAMA).
Dr Annette Detken, head of InsuResilience Solutions Fund (ISF), said that with the two innovative flood insurance solutions, Accra now has the necessary mechanism at hand to increase the financial protection of its vulnerable population. Once implemented, the project has the potential to be further scaled up to strengthen the resilience of other cities in Ghana.
Led by the Ghana Ministry of Finance, United Nations Development Programme’s Insurance and Risk Finance Facility, and the IDF, with support from the German Federal Ministry of Economic Cooperation and Development (BMZ) through the InsuResilience Solutions Fund (ISF), the project, started in 2022, positions Ghana as a leader in urban flood risk adaptation.
Flood contingency plan
UNDP, working closely with the National Disaster Management Organization (NADMO) and other government stakeholders, led the drafting of a Flood Contingency Plan, and the IDF industry provided technical support and input. The Plan prioritises the deployment of funds from the payout for food relief, emergency shelter and non-food relief items, logistics services, environmental sanitation and hygiene promotion, restoration of livelihoods, restoration of teaching and learning materials, and restoration of critical infrastructure.
Rising flood risks in West Africa and globally
Historic flooding across West and Central Africa has affected an estimated 6.6m people this monsoon season. Climate change has intensified global flood risks, with devastating impacts on developing countries, where 89% of the world’s flood-exposed people live.
In Ghana, over 27 major floods have occurred in the past three decades, 15 of which hit Accra, the rapidly expanding capital. As flood exposure increases, financial protection remains weak. Seven out of ten Ghanaians lack access to insurance and 42% of the population remains excluded from basic financial services.