12 December 2023

Britam and Swiss Re Pay Out Sh14.1 Million in Flood Insurance Claims to Tana River Households

December 12, 2023 … Flood-affected households in Madogo Ward, Tana River County have received a major boost after Britam and Swiss Re processed Sh14.1 million as compensation for their losses. The claim, following the recent flooding in Upper Tana, was paid under the Index-Based Flood Insurance (IBFI) policy, designed to cushion small-scale farmers residing in flood-prone areas from the catastrophic effects of floods.

Developed using data modelling and satellite imagery to predetermine flood thresholds and provide coverage at an affordable cost, IBFI is a result of a partnership between Britam, Oxfam in Kenya and global reinsurer Swiss Re. Other players in the partnership include Risk Shield and Arid Lands Development Focus (ALDEF), which is Oxfam’s implementing partner in Upper Tana.

Britam Group Managing Director and CEO Tom Gitogo said that Britam, as part of its commitment to ESG goals and its purpose of safeguarding dreams and aspirations, was working to enhance the resilience of vulnerable communities, enabling them to rebuild their lives after a disaster. “At Britam, we will not hesitate to step into the unknown if it enhances the resilience of the vulnerable within our community,” said Mr Gitogo when Britam handed over the payment to Oxfam for the affected households.

Britam Director for Emerging Market Consumers, Saurabh Sharma, explained that IBFI differs from traditional insurance products because it relies on technology-based innovations to previse possibility of floods and thereby pay claims quicker. Two parameters- rainfall and river water levels are used to predict flooding and its impact on communities.

“We measure rainfall using satellite data, and within two days we can determine whether a rainfall will trigger flooding or not. The Tana River water level is measured using automated water gauges with data being available hourly within a day of the incident,” said Saurabh. The remote sensing technology makes it possible to determine the loss and make payment within days as visits to the field to assess the loss are not required.    

Under the partnership, Oxfam funds the Sh7,000 per year premiums for each of the 300 vulnerable households in Upper Tana. It also facilitates payment to the households insured under the Policy. Risk Shield, for its part, analyses the river level and satellite data and determines the amount of compensation to be paid. Swiss Re reviews and approves the determined payout, which paves the way for Britam to release compensation to Oxfam, the master policyholder. “This claim payout demonstrates that insurance can be an effective approach to transforming disaster response in the region,” said David Abudho, Social Protection Strategist at Oxfam in Kenya.

Swiss Re Head P&C Solutions Western and Southern Europe and MEA, Annkathrin Stephan, added that the payout, the first of its kind under the flood parametric policy in Kenya, underscored their commitment to building resilience against adverse climatic conditions by partnering with firms such as Britam. “The focus of our efforts has been to make the underlying solution accessible to communities at large and include features that enable fast claims settlement which is aligned with Swiss Re's commitment to make the world more resilient; he said. Risk Shield Consultants Managing Director, Agrotosh Mookerjee, added "We are confident this product can insure millions of people in Kenya as well as other countries in Africa in the coming years."

Floods have become a frequent menace in Kenya due to climate change. The new index-based flood insurance product is a breakthrough in making insurance possible for those who live in areas with a high risk of flooding but may not have access to conventional property insurance products. Governments, donors, and humanitarian agencies could also use the product as a tool to build more resilient communities in the face of climate change and other environmental challenges. Alongside index-based flood insurance, Britam has policies on health, crop, and last expense, which are specifically designed for SMEs and low-income families.