(Bloomberg) --Lagos, Nigeria's commercial hub, has secured a $7.5 million flood insurance policy so some of its poorest residents can access relief when disaster strikes.
The policy covers up to 4 million people in the coastal megacity, according to a
"Climate inaction could cost Lagos State just under $40 billion by 2050," Governor Babajide Sanwo-Olu said in the statement. "This pioneering parametric flood insurance policy strengthens our ability to protect lives, livelihoods and public finances."
Unlike traditional insurance, this type of policy uses pre-agreed triggers, such as satellite-detected flood height, to release funds automatically, without requiring damage assessments. Affected communities in the seven flood-prone local government areas covered by the policy would receive direct cash transfers or broader disaster relief, if water levels exceed 50 centimeters (20 inches), according to a related
The Lagos government said in October that flooding had displaced 3,000 people and affected more than 6,000 others over the nine previous months.
The policy was designed by AXA Mansard, AXA Climate, Swiss Re, and African Risk Capacity, among other partners, with support from IDF and the United Nations Development Programme. The InsuResilience Solutions Fund, backed by Germany, financed 90% of the premium for the first year, while Lagos State covered the remainder and committed to paying a larger share in years two and three.
