The IDF, alongside the Ghana Ministry of Finance, the United Nations Development Programme (UNDP) and the German Government, announced its launching during the IDF Summit in Switzerland.
The project will aim to develop a sovereign risk transfer scheme for urban floods in Ghana, by enhancing the response of the Ghanaian National Disaster Management Organisation (NADMO) and local authorities through increased access to data, detailed risk insights, and activation of contingency protocols.
According to the announcement, the above will be done alongside long-term investments in the country’s capacity to leverage and integrate insurance and risk financing into their development strategies.
By carefully selecting a pre-defined trigger for pay-out as opposed to assessing actual losses, the parametric insurance solution will enable quick pay-outs in case of a flood. This, according to IDF, will improve resilience and support the rapid re-establishment of economic activity of low-income communities in urban areas, starting with the Greater Accra Metropolitan Area (GAMA).
Ababacar Diaw, acting CEO, Allianz Ghana, said: “The collaborative development of this parametric insurance solution through a public-private partnership plays into the UN Sustainable Development Goals and is an important contribution to increasing the climate resilience of urban poor and vulnerable people in Accra. Parametric insurance solutions are especially useful in regions where insurance infrastructure, such as good data, is less available.”
UNDP Country Representative Angela Lusigi pointed out, “At UNDP Ghana, we are committed to supporting integrated development solutions that build resilience across society to protect Ghana’s development progress. This project to develop an innovative insurance solution for managing flood risks and to provide rapid pay-outs as a safety net for poor and vulnerable urban communities is welcome.
“It will serve as a boost to government and private sector efforts to provide wider access to insurance and risk finance. By blending the financial-solution expertise developed by the government, with the long-term development and governance support offered by UNDP in partnership with the private sector, we will be able to advance Ghana’s ambitious development agenda.”
This risk transfer project, will be co-funded by the IDF insurance industry members and he InsuResilience Solutions Fund (ISF), funded by the KfW Development Bank on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ) and managed by Frankfurt School of Finance & Management.
Claudia Thyme, Industry Deputy Chair, IDF Sovereign and Humanitarian Solutions Working Group, said, “One reason why the protection gap persists is that it is often costly to design insurance solutions tailored to the specific needs and requirements of developing countries.
“Co-funding from the German Government enables the IDF to uniquely address this problem by working on the product development stage in cross-company teams, as an industry. Once a programme has been designed, it is easier for governments to find insurance companies to insure the risk.”
Further partners in the project are flood risk consultants HKV, microsatellite operator ICEYE, and media monitor Flood Tags.
Source: Commercial Risk