Insurance and risk transfer

The Lagos State government has contracted a parametric flood-risk insurance policy in the Nigerian insurance market, covering up to 4 million vulnerable people and securing up to US$7.5 million for flood response and recovery.

A major Tokyo earthquake could trigger huge uninsured losses, forcing banks to sell foreign assets and potentially shaking global markets. The city’s wealth concentration and seismic risk create a rare but serious financial vulnerability.

As rising climate risks drive insurance providers out of vulnerable markets, states are increasingly advancing policies that seek to transform insurance from a market of uncertainty and rising costs into a transparent tool for community resilience.

Crop insurance can help smallholder farmers in Africa and elsewhere manage climate risk and stabilize livelihoods in the face of droughts and extreme weather. Scaling coverage requires better product design, farmer education, and links to credit.

Fifteen years after Tohoku, the article argues that despite better models and data, true resilience requires accepting structural uncertainty, stress‑testing interconnected risks, and ensuring reinsurance capital is ready for extreme, system‑wide shocks.

Recognizing its high exposure to climate and natural hazards, the country developed a multilayered disaster risk financing strategy designed to cushion the fiscal impact of major events like Hurricane Melissa.

More than USD 29 million has been mobilised to support Madagascar’s response and recovery following tropical cyclones Fytia and Gezani through a combination of pre-arranged financing solutions.