Swiss Re co-delivered innovative risk transfer solution for urban flooding in Accra, Ghana
Ghana faces increasing vulnerability to climate change, with 16 major floods since 1990, particularly affecting poor and vulnerable households. These floods strain the government's finances and resources, requiring urgent emergency response and recovery efforts. Recognising this critical need, the Insurance Development Forum (IDF), and BMZ through the InsuResilience Solutions Fund (ISF) and the United Nations Development Programme (UNDP) launched a groundbreaking project to develop a flood insurance solution for Accra in 2022.
The hand-over of a comprehensive technical report to the government of Ghana at end of 2024 marked the completion of this project (see announcement ). Concretely, the project team, co-led by Swiss Re, has crafted two parametric insurance solutions: a traditional excess rainfall (XSR) product and a cutting-edge flood footprint product (FFP). The XSR payout is triggered by the amount of rainfall, while the FFP is determined by water on the ground, observed by satellite-mounted radars. Even if still new, the FFP boasts higher accuracy and has proven effective in other parts of the world. If Ghana decides to implement the FFP, it would be a pioneer in climate risk mitigation, specifically for urban flooding.
Uniquely, this project has also carefully selected the insured areas to cover poor and vulnerable households in low-income residential areas and informal settlements. Additionally, a contingency plan ensures that funds from payouts will be prioritised for food relief, emergency shelter, non-food relief items, logistics services, environmental sanitation and hygiene promotion, restoration of livelihoods, teaching and learning, and critical infrastructure.
Developing such a product requires significant effort by all parties involved. By co-funding product development ISF creates a unique ecosystem and enables insurance industry partners to collaborate, learn, and innovate together. Once a government decides to implement the product, then bidding can be opened to all market participants ensuring competitive pricing. With the product development phase now complete, we eagerly await the Ghanaian government's decision to implement and bring this solution to market.
This risk transfer product development project follows other projects launched in 2020, 2021 and 2022 with ; and , respectively, but was the first launched in Africa under the Tripartite Agreement announced in 2019 between the UNDP, the German Government, and the IDF. The Tripartite Programme aims to provide technical assistance and sovereign and sub-sovereign risk financing solutions to countries vulnerable to the impacts of climate change, for their public assets, as well as for sectors, such as agriculture, education, health and transport, among others, to protect their most vulnerable populations.
For more information about this project or parametric flood insurance in general, please contact Swiss Re Public Sector Solutions.