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Biblioteca Development of a flood index insurance product for Zambia

Development of a flood index insurance product for Zambia

Development of a flood index insurance product for Zambia

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Date of publication
Dezembro 2022
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ISBN / Resource ID

Weather Risk Management Services Pvt Ltd (WRMS) is collaborating with the International Water Management Institute (IWMI) as part of the CGIAR Initiative on Climate Resilience (ClimBeR) to develop financial solutions for post-extreme climatic events. The focus is on creating parametric insurance solutions to aid vulnerable populations in managing and mitigating loss and damage caused by natural disasters, with a primary emphasis on floods.
The project's scope involves a comprehensive approach to enhance community resilience through financial solutions for flood. It begins with identifying vulnerable locations using secondary data sources. The subsequent steps include developing parametric insurance products, setting triggers and damage ratios based on past events, and evaluating community vulnerability.
Zambia is particularly prone to seasonal floods from November to April. Major rivers like Zambezi, Kafue, and Luangwa can lead to widespread inundation, impacting lives, displacing communities, damaging infrastructure, and disrupting agriculture. The project focuses on flood risk in specific regions, the Kafue flats area in Lusaka and Southern Provinces.
Data sources crucial for assessing flood severity include river water level, dam discharge data, and rainfall. The study utilizes historical data from 1980-2023 for water level and discharge, and 2000-2020 for rainfall, collected from multiple locations in the Kafue plains area.
The development of the flood index-based insurance product involves analyzing data to determine triggers for flash floods and riverine floods. The shortlisted region experienced severe flooding in the past, and detailed analysis has been done to validate if the collected data sets capture both the intensity and duration of those extreme events.
The proposed index insurance product features triggers based on water level and rainfall data, offering fast and transparent settlement with low administrative costs. For riverine floods, payouts depend on the increase in daily water level from a set benchmark, considering the number of days above the threshold. For flash floods, compensation is triggered by excess rainfall over a specified period.
Ultimately, the project aims to offer a combined flood coverage product addressing both flash and riverine floods, contributing to the overall goal of strengthening disaster resilience through integrated risk analysis, financial solutions, and actionable protocols.

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Batra, N. , Amarnath, Giriraj

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