Lagos State Government, UNDP, German Government and the Insurance Development Forum launch a Flood Risk Insurance project to cover citizens against urban floods in Lagos State.
May 18, 2023
18 May, Lagos – The Lagos State Government, the United Nations Development Programme (UNDP) and the Insurance Development Forum (IDF) launched a Flood Risk Insurance project to cover citizens against urban floods in Lagos State, through the project’s first kick-off workshop in Lagos. The project is funded by the German Government, which supports UNDP’s Insurance and Risk Finance Facility (IRFF), and the InsuResilience Solutions Fund (ISF), which provides co-financing to industry.
“It is with great delight that I stand on behalf of the State together with UNDP, German Government & IDF for the Launch of the Flood Risk Cover for Lagos State.” – according to the welcome remark by the Governor of Lagos State, represented by Lagos State Commissioner of Economic Planning, Mr. Sam Egube.
Flooding is a major risk for many states across Nigeria, inflicting substantial socio-economic consequences for the poor and vulnerable urban population and stretching the response capacity of local authorities for flood victims. The coastal city of Lagos is particularly affected by annual floods. These floods exacerbate socio-economic shocks for 63% of the Nigerian population (133 million people) living in multidimensional poverty, of which 4 million reside in Lagos State. Insurance, which transfers a portion of risk to the private sector, is one instrument that could help spread the cost of flood risk and improve the resilience of the impacted populations. Yet, insurance penetration is low at just 0.4% - one of the lowest in Africa.
The Honourable Minister of Finance, Budget and National Planning represented by Dr. Usman Jankara noted that “The threats of climate change and its catastrophic damages are Africa’s realities: the recurring floods in Lagos State and many parts of Nigeria are evidence
that climate change and the resultant flood has become a cause for serious concern, as the devastating impacts on the vulnerable segment of the Nigerian populace reinforces the fact that flood risk can no longer be ignored.”
The Lagos State Flood Risk Insurance Cover is an innovative pilot project seeking to provide a flood risk transfer solution for urban floods in Lagos. The project proposes an index-based emergency relief fund that will enhance the disaster response capacity of Lagos State Government and help mitigate adverse socio-economic consequences. The insurance cover will support Lagos State Government to provide rapid pay-outs of disaster relief funds to the affected residents of Lagos State and contribute to the fast reconstruction of critical infrastructure.
The UNDP Nigeria Resident Representative represented by Ms. Precious Akanonu, UNDP National Economist, highlighted that the flood risk insurance cover for Lagos State will “in the long-term contribute towards improving financial resilience against disasters such as floods. Further, it will contribute towards closing the disaster and risk protection gap and ensure that progress towards achieving the Sustainable Development Goals (SDGs) is made.”
The IDF consortium represented by AXA Climate Head of Public Sector, Karina Whalley and Bode Olajumoke, emphasized that “Lagos State is at the very forefront of innovation with the critical purpose of protecting its most vulnerable against disaster. We are very proud to be part of this powerful initiative with the backing of the ISF.”
Rashidat Adebisi, Chief Client Officer, AXA Mansard also added that “Flooding has far-reaching impact on individual, economic and social lives and AXA Mansard is proud to be a part of the IDF consortium to provide flood risk cover to Lagosians. We are convinced that initiatives like this will help increase resilience and coping mechanism when disasters strike and create a clear opportunity for people to experience the positive impact of insurance in their lives.”
To wrap up the session, UNDP’s Insurance and Risk Finance Facility (IRFF) Regional Technical Lead for Africa - Linet Odera noted her delight in “the level of engagement and active participation displayed by the stakeholders today led by Lagos State leadership”. She added that “UNDP is committed to steering this partnership towards a successful implementation and spreading the achievement the other States in Nigeria…”
Note to Editors
About the Lagos State Flood Risk Insurance Cover project
The overall objective of the Flood Risk Insurance project is to cover poor and vulnerable populations in Lagos State against the risk of pluvial, fluvial, and coastal flooding by means of a flood parametric insurance product.
Several indexes based on rainfall and flood (and combinations of them) will be tested to determine the best option to cover Lagos State from pluvial, fluvial and coastal flooding. To support Lagos State Government in strengthening their flood risk management the project proposes to quantify the risk of flooding across the Stateand design a parametric flood insurance cover that could rapidly release funding to Lagos State to cover emergency disaster relief or rapid repair/reconstruction of critical network infrastructures (to be decided by the Government according to a Contingency Plan). The focus of the cover will be made on urban areas and especially the poor and vulnerable living in flood-prone areas
About UNDP’s Insurance and Risk Finance Facility (IRFF)
The UNDP IRFF is a flagship initiative housed within UNDP’s Sustainable Finance Hub and is the first dedicated corporate vehicle for insurance and risk finance. One of the largest programs the Facility manages is the Tripartite Agreement between UNDP, the German Government, and the Insurance Development Forum (IDF). A key element of this agreement is the development of sovereign risk financing and inclusive insurance solutions while also investing in the long-term transformation of insurance markets.
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