Residents stand near an uprooted tree after heavy flash floods wiped out several homes when a dam burst, following heavy rains in Kamuchiri village of Mai Mahiu in Nakuru County, Kenya on April 29, 2024. PHOTO | REUTERS
Regional insurer Britam paid out claims of Ksh15 million ($115,858) to 300 vulnerable households affected by the El Niño flooding last year in Kenya's coastal county of Tana River.
The claims were paid under the Index-Based Flood Insurance (IBFI) policy which is designed to cushion small-scale farmers residing in flood-prone areas from the catastrophic effects of floods.
Britam Holdings in partnership with Swiss Re and Oxfam Kenya in May 2023, launched the flood insurance product dubbed Britam Mafuriko to cushion farmers living along the banks of the Tana River from losses resulting from heavy rains.
Under this arrangement, Swiss Re underwrites Britam’s insurance solution through reinsurance support while Oxfam is the initial premium financier. Two parameters – rainfall and river water levels are used to predict flooding and its impact on communities.
The payout for 2023 was handed to Oxfam which facilitated payment to the 300 households covered by the flooding insurance policy. Britam says it will expand the programme’s reach.
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“Launched in 2023 with Oxfam and Swiss Re, this pilot programme protects small-scale Tana River farmers from floods. This innovative solution uses rainfall and river data for swift payouts, eliminating traditional claim assessments. The programme successfully insured 300 families, disbursing Ksh15 million ($116,731) in claims with 48-hour processing due to recent El Nino rains,” Britam stated in its 2023 Sustainable Report.
Besides the flood policy, Britam has an index-based livestock insurance which has benefitted over 2,800 pastoralists in drought-prone counties. At the same time, Britam runs index-based crop insurance with over 7,500 smallholder farmers covered against weather risks and pests/diseases.
Britam Group Managing Director Tom Gitogo says the insurer has innovated to tackle the low coverage against weather-linked perils.
“Sub-Saharan Africa faces extreme weather events, with low insurance penetration for weather-related losses. Britam addresses this gap with initiatives like index-based flood and crop insurance, protecting small-scale farmers against adverse weather effects,” he noted.
The disclosures by Britam come against the industry's strife in meeting claims tied to the effects of heavy rains and flooding.
Data from the Insurance Regulatory Authority (IRA) indicated that insurance firms had only settled five percent of claims for damaged farms, houses, industries, and office blocks, or Sh147.3 million.
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According to regulator notes up to the end of April this year, insurance companies received more than 850 claims valued at Sh3.145 billion.
“In 2024, Kenya faced substantial flooding due to heavy rainfall, leading to significant damage and loss of lives. Consequently, insurers experienced a surge in claims for damages and losses caused by the flooding,” IRA stated.
More than three-quarters of claims valued at Sh2.7 billion or 673 claims were reported in Nairobi with other leading counties being Kiambu, Nakuru, Meru, and West Pokot.
From the IRA disclosures, GA had received the highest value of claims at Sh988.1 million but had only settled one claim valued at Sh327,280.
Flood-related insurance claims are set to worsen business for insurers who are already grappling with losses in their core activity of selling policies.
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