Britam, a leading financial services company in Kenya, has partnered with Swiss Re, a global reinsurer, and Oxfam in Kenya to introduce an innovative index-based flood insurance solution for small-scale farmers living along the Tana River. This solution uses data modeling and satellite imagery to predict flood thresholds and provide coverage at an affordable cost.
Saurabh Sharma, Britam’s Director of Emerging Consumers, explained that the solution utilizes water level data to establish historical patterns of flooding along the Tana River, which is then analyzed with socio-economic information to assess the effects of flooding on households. The insurance scheme, which will initially be piloted in Tana River County, pays claims based on long-term data on rainfall and water levels. Since these parameters can be monitored remotely, Britam can promptly pay flood-related claims, supporting the local government and other organizations in their flood mitigation efforts.
Floods have become a common occurrence in Kenya due to climate change, and the index-based flood insurance solution is especially useful for those who live in areas with a high risk of flooding but may not have access to conventional property insurance products. According to the Kenya Red Cross Society, floods have affected over 3.4 million people in Kenya between 2000 and 2018, causing hundreds of deaths and displacing over 300,000 people.
David Abudho, Social Protection Strategist at Oxfam Kenya, noted that climate change has made events such as floods more frequent, and therefore, the organization chose to work with Britam to introduce this innovative solution. Oxfam will provide the initial premium financing, and the index-based flood insurance was also designed jointly by AB Consultants and Risk Shield, firms that specialize in designing index-based insurance solutions.
Swiss Re will provide reinsurance support to Britam for underwriting the insurance solution. Kudzai Bingepinge, Head P&C Solutions MEA at Swiss Re, expressed his excitement about the launch of this innovative new solution in Kenya, noting that it is a valuable addition to the insurance market and will help to protect vulnerable households against floods.
The partnership between Britam, Swiss Re, and Oxfam in Kenya represents a significant step towards providing accessible and affordable insurance solutions for those who are most vulnerable to the effects of climate change. If successful, this innovative solution could be replicated and scaled up to protect households across the country.