Uncharted Waters: Insurance Firm Launches Cover Against Floods

Britam Holdings Plc, in partnership with Oxfam in Kenya and global reinsurer Swiss Re, has launched an index-based floods insurance in Kenya to cushion small-scale farmers living along the banks of Tana River from the adverse effects of catastrophic floods.

The floods insurance solution has been developed using data modelling and satellite imagery to predetermine flood thresholds and provide coverage at an affordable cost.

According to Saurabh Sharma, Director Emerging Consumers at Britam, the solution uses  water level data to determine historical patterns of flooding along the Tana River. It determines the likelihood of floods using these patterns and analyzes it with socio-economic information to assess the impacts of flooding on households. The insurance scheme will initially be piloted in the Tana River County.

“This innovative solution has been designed using long-term data on the rainfall and water levels in the Tana River as parameters to pay claims. As these parameters can be monitored remotely, Britam will be able to pay flood related claims swiftly, thereby supporting the local government & other organizations in their flood mitigation efforts,” said Sharma.

Developed with support from Oxfam in Kenya, which will provide the initial premium financing, the overall goal of the risk transfer solution is to enhance the local communities’ ability to absorb climate shocks, improve their ability to reduce and manage risk and maintain food security.

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“Due to climate change, events such as floods have become quite frequent. We therefore decided to work with Britam to introduce this innovative solution. We hope the stakeholders lend their support, to replicate and scale up this innovative solution, so that the most vulnerable households across the country can be protected against floods,” said Mr David Abudho, Social Protection Strategist at Oxfam in Kenya.

The index-based flood insurance was also jointly designed by AB Consultants an independent market driver in the inclusive insurance space, and Risk Shield, an actuarial firm specialized in designing index-based insurance solutions.

Barbara Chesire, the Managing Director at AB Consultants, said:  “This solution is especially valuable for those who live in areas with a high risk of flooding but may not have access to conventional home insurance due to factors such as location or cost. This provides a more accessible and affordable option for such households.”

Swiss Re will provide reinsurance support to Britam for underwriting this insurance solution. “Floods are a major challenge for many communities in Kenya, and we believe that our index-based flood insurance solution will help to reduce the impact of floods and protect vulnerable households and businesses,” said Kudzai Bingepinge, Head P&C Solutions MEA (Middle East and Africa) at Swiss Re.

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The index-based flood insurance solution is especially valuable for those who live in areas with a high risk of flooding but have no access to conventional property insurance products. According to the Kenya Red Cross Society, between 2000 and 2018, floods affected over 3.4 million people in Kenya, causing over 350 deaths and displacing over 300,000 people.

Britam and Swiss Re’s new solution is a breakthrough in addressing this gap, and may become an important tool for governments, donors, and humanitarian NGOs working to build more resilient communities in the face of climate change and other environmental challenges.