Like Ghana, Nigeria is exposed to significant flood risk due to several factors, including its geographical location, rapid urbanization, and climate change. Nigeria’s capital Lagos is a coastal city situated along the Atlantic Ocean with a tropical climate making it vulnerable to both coastal and inland flooding. The city's low-lying areas and numerous water bodies increase the risk of flooding during heavy rainfall events and high tides.

Rapid urbanization in Lagos has meant that many wetlands and water bodies have been paved over, reducing natural drainage areas and increasing the likelihood of surface runoff during heavy rains. These risks are compounded by poor drainage infrastructure, seasonal rainfall, and climate change. Flooding disproportionately affects low-income communities in Nigeria, which make up a significant proportion of the population, and who often lack the resources and infrastructure to cope with - or recover from - flood-related damages.

Through the TPA, UNDP and industry partners launched a programme with the Lagos State Government in Nigeria to design a sub-sovereign risk transfer scheme that provides flood risk coverage for Lagos State.

This TPA project harnesses innovative insurance solutions to safeguard 1.7 million households within Lagos, comprising 8.5 million people and ensuring swift payouts in the event of a flood. The project will utilize an inventive parametric insurance solution that disburses a predetermined sum based on the severity of the flood, in contrast to traditional indemnity policies that rely on assessing the magnitude of losses through on ground loss adjustment process.

Complementary to the development of this flood insurance for Lagos State, UNDP is also working with government partners to develop a National Disaster Risk Finance Strategy to strengthen the management of a broad range of risks across the country. UNDP is working with government partners to stimulate local insurance markets, supporting efforts to strengthen insurance regulation and catalysing local innovation within Nigeria’s insurance sector through the provision of grants via UNDP's Insurance Innovation Challenge Fund.

November 11th, 2024

Insurance4SDGs

November 11^th, 2024