4th March 2024 – Author: Kassandra Jimenez-Sanchez

Floodbase has been awarded a grant to launch parametric flood insurance programs for farmers in Mozambique and Malawi, with support from African Risk Capacity Limited (ARC Ltd.) and Global Parametrics.

Farming in Africa

In Mozambique, over 80% of people depend on agriculture for their livelihoods, and 99% of smallholder farmers in Africa are uninsured against agricultural risks.

Historically, insurers have struggled to create economically viable flood insurance products across the African continent, Floodbase highlighted.(

Modelling flood risk across large, agricultural regions is challenging to do accurately, and claims management is operationally difficult and prohibitively expensive for traditional indemnity products. Both factors have limited the availability of flood insurance in emerging economies,” the firm explained.

Adding: “And yet with devastating events like Cyclone Idai responsible for $700m in economic loss, it’s clear that effective climate adaptation requires new solutions that bring together innovative technology, local expertise, and a new approach to transferring and reducing risk.”

Quex, Unparalleled Exposure Management from Quotech

According to Samantha Power, USAID Administrator, a Floodbase analysis found that if its program had been in place during Cyclone Idai in March of 2019, more than 10,000 farmers in the central regions of Mozambique could have received a cash payout within days of the event.

This fast rollout of cash payout would have helped them avoid acute food insecurity, Power emphasised.

The grant – awarded through the U.S. Agency for International Development (USAID) as part of the President’s Emergency Plan for Adaptation and Resilience (PREPARE) as reported by Bloomberg – will enable Floodbase to help smallholder farmers in Malawi and Mozambique avoid financial hardship in the wake of devastating floods that are becoming more frequent and intense due to climate change.

Floodbase-enabled parametric flood insurance will provide financial protection for previously uninsurable risks, ensuring that events like Cyclone Idai don’t destroy the livelihoods of African farmers.

To achieve these, Floodbase plans to design risk transfer programs across both countries; Global Parametrics, a member of CelsiusPro Group, and ARC Ltd. will be supporting the project with underwriting, capacity building, and deployment of risk capacity.

These parametric flood insurance programs will be underwritten and monitored using satellite observations and machine learning, which in turn enable insurers to trigger payouts in days rather than years.

Bessie Schwarz, Floodbase CEO, commented: “Our collaboration with Global Parametrics, ARC Ltd., and USAID is an excellent blueprint for bringing new parametric flood products to market; USAID funding the development of the programs derisks the venture, both risk-transfer partners will ensure the programs are financially sustainable, and ARC Ltd. brings a wealth of local distribution expertise to ensure farmers can access policies. Both Floodbase and our partners are dedicated to closing the insurance gap in Africa and scaling our approach as broadly as possible.”

Mark Rueegg, CEO of the CelsiusPro Group, shared his agreement with Schwarz, he said: “Parametric risk transfer and risk capacity deployment are pivotal for bridging the protection gap, especially as the demand for pre-arranged financing for climate disasters intensifies.

“In 2023, Global Parametrics, through its Natural Disaster Fund, strengthened climate resilience for 31 million poor and vulnerable people, deploying capacity to underwrite natural disaster risks in 70 countries eligible for official development assistance. We are grateful for the collaboration with Floodbase and ARC Ltd. to strengthen the resilience of communities in Malawi and Mozambique.”

“We’re excited to partner with Floodbase to complement our portfolio of innovative parametric solutions to support flood-vulnerable communities in Malawi and Mozambique. We have deep expertise distributing insurance products across Africa, which will help ensure the largest possible participation in these Floodbase parametric programs,” said Lesley Ndlovu, ARC Ltd. CEO.

source: https://www.reinsurancene.ws/floodbases-parametric-flood-insurance-programs-to-support-farmers-in-mozambique-and-malawi/

Leave a Reply

Your email address will not be published. Required fields are marked *