Parametric Insurance / Risk Pools (For Flooding and Coastal Hazards)
Extreme rainfall, sea-level rise, and storm surges create recurrent losses for communities and governments across the Gulf of Guinea. Traditional insurance often fails to deliver timely or adequate support in these contexts. Parametric insurance, however, offers a powerful alternative: payouts are triggered by pre-defined thresholds (e.g., rainfall intensity, tide levels, or wind speed), enabling rapid liquidity for disaster response. GoG-RRI aims to help design city-level parametric products—for example, in Lagos, Accra, and Cotonou—while promoting membership in regional risk pools to reduce premium costs. By embedding parametric triggers into social protection systems and municipal contingency plans, GoG-RRI will ensure that vulnerable populations benefit directly and quickly, reducing recovery times and economic losses.
Example: The potential of coastal and oceanic climate action. Our focus on Nature-based climate solutions in the Atlantic Ocean can play an important role in conservation and carbon abatement efforts in the Gulf of Guinea.
Drawn by access to marine resources and trade routes, people have settled along the world’s coastlines throughout history. In today’s globalized world, 37% of humans live along the coast. The combined values from shipping, tourism and commercial and subsistence fishing mean that living by the sea offers great opportunity.
Notably, Oceans and coasts cover 72 percent of the planet’s surface, they have absorbed about 40 percent of carbon emitted by human activities since 1850. Coastal ecosystems such as mangroves, tidal marshes, and seagrass meadows act as deep carbon reservoirs, while marine ecosystems and fauna absorb and sequester greenhouse gases (GHG) through the carbon cycle.
However, over recent decades, both oceans and coasts have come under pressure from atmospheric and marine warming, habitat destruction, pollution, and the impacts of overfishing and industrial activity. These destructive factors undermine the effect of oceanic systems in reducing atmospheric carbon.
Humankind’s impact on coastal and offshore ecosystems is a double-edged sword. While we are responsible for significant destruction, we also have agency over potential outcomes. Through our efforts, we can avert damage to or even restore ocean ecosystems, removing carbon from the atmosphere and moving the world toward net-zero emissions, as envisaged by the Paris Agreement on climate change.
- What it is: Rapid-payout policies triggered by rainfall, river level, storm surge or wind thresholds; pooled at regional scale to lower premiums.
- Why it fits: West Africa’s coastal flooding is frequent; parametric triggers speed liquidity for emergency response and early recovery.
- Proof of concept: African Risk Capacity (ARC) launched Africa’s first flood risk parametric product; ARC Ltd provides pooled parametric cover to AU members and organizations. arc.intarcltd.org
- GoG-RRI angle: Pilot city-level parametric covers (e.g., Accra, Cotonou, Lagos) tied to tide-gauge/satellite data; pair with contingency plans and social-protection disbursement rails.
