The Insurance Development Forum (IDF) has completed the design of a parametric flood insurance solution for the Lagos State Government in Nigeria as part of the Tripartite Agreement Programme.
The solution was developed as part of the Tripartite Agreement Programme of the IDF, the United Nations Development Programme (UNDP), and the German Federal Ministry for Economic Cooperation and Development (BMZ) through the InsuResilience Solutions Fund (ISF).
The design of this sub-sovereign risk transfer solution was undertaken by a team of IDF member organisations in partnership with the Lagos State Government, including AXA Climate, Swiss Re, AXA Mansard in Nigeria, flood modeler JBA Risk Management, satellite company ICEYE, and African Risk Capacity Ltd. (ARC Ltd.), supported by the UNDP team in Nigeria.
Partners in Nigeria reportedly include the Lagos State Government, the Lagos State Ministry of Finance, Lagos State Ministry of Budget and Economic Planning, and the Lagos State Emergency Management Agency (LASEMA).
As the IDF explains, flooding in Lagos State disproportionately affects poor and vulnerable populations, while climate change is reportedly increasing the frequency and severity of such events.
“The innovative parametric insurance product is projected to protect up to 4 million people by enabling swift financial support when pre-agreed flood triggers are met, based on satellite flood footprint data. In the event of a catastrophic flood, the product could provide access to up to USD 7.5 million in coverage,” the IDF commented.
Use of the product will allow the Lagos State Government to access funds to support emergency response efforts, including disaster relief and direct cash transfers to affected communities.
“The product forms a key part of Lagos State’s wider flood risk management and climate resilience strategy. UNDP is supporting the Government of Nigeria to scale the flood insurance project to a national scheme, developing a National Disaster Risk Finance Strategy and contributing to the integration of risk finance into Nigeria’s Nationally Determined Contribution (NDC) 3.0,” the IDF explained.
The IDF has also confirmed that regulatory approval for the product has been obtained, with the next steps set to include the state government arranging premium financing options, which will facilitate the integration of the product into Lagos State’s catastrophe contingency and fiscal planning frameworks.
Dr Oreoluwa Finnih, Special Adviser to the Governor of Lagos State on Sustainable Development Goals, commented: “The delivery of this parametric flood insurance solution is a vital milestone in strengthening Nigeria’s adaptation to manage climate risk. It exemplifies the innovative public-private partnerships needed to build fiscal resilience and help communities prepare for climate impacts. We look forward to seeing this product implemented and protection in place for Lagos State.”
Ivo Menzinger, Chair of the IDF Operating Committee, Managing Director and Executive Advisor at Swiss Re, said: “This milestone demonstrates the power of collaboration between government, insurance, and development partners. The design phase harnessed the industry’s technical expertise in flood risk modelling and parametric insurance to develop a tailored, scalable solution for Lagos. We are committed to supporting local ownership as this solution moves towards regulatory approval and integration into government systems.”
Dr. Annette Detken, Head of the InsuResilience Solutions Fund (ISF), added: “This achievement marks a pivotal step in our mission to build climate resilience through innovative risk financing. By supporting the development of this parametric flood insurance solution for Lagos State, the ISF is helping to unlock timely and reliable financial protection for those vulnerable to climate-related disasters. This is precisely the kind of locally owned, scalable solution the Tripartite Programme was designed to deliver, one that strengthens systems, builds capacity, and lays the foundation for long-term resilience in Nigeria.”
