www.cgiar.org Bundling Parametric Insurance to Build Climate Risk Resilient Community: Experience from IBFI Application in Zambia Yakob Umer, Giriraj Amarnath, Suman Kumar Padhee, Mirriam Makungwe www.cgiar.org Parametric Insurance Deploying and rapidly scaling in a coordinated and inclusive way How does it work? Piloted in Zambia: Mazabuka Index-Based Flood Insurance (IBFI) What is Parametric Insurance? www.cgiar.org Why Parametric Insurance in Zambia: EO Flood Inundation Mapping in Zambia While Zambia contends with several hazards, ric ​In February 2023, Zambia faced its most severe flooding in over half a century, as reported by the Zambia Disaster Management and Mitigation Unit (DMMU)​ ​According to the comprehensive flood assessment conducted by IWMI, the total flood-affected area was estimated to be approximately 4,662 square kilometers. This assessment utilized satellite data from MODIS, Sentinel-1, Sentinel-2, and RADARSAT CRD2.​ Central and Southern Provinces 110 320 220 55110 320 220 5558 170 119 29 660 1920 1320 330 70 27 860 93 380 245 ITEBE MWANACHINGWALA MUNENGA KALAMA El e m e n t A ff e ct e d b y Fl o o d ( n u m b e r) Village name No.house hold affected No of House hold displaced No of People affected No of people displaced Developing Index Based Parametric Insurance (IBPI) Considers integrated flood hazard model, economic loss data and satellite images for index development Flood Model and Satellite Data for Inundated Crop Area www.cgiar.org The Scope ▪Bundling climate insurance solutions: Index Based Flood Insurance (IBFI) (co-design and co-implement with insurers/SMEs and MoA) under UU– With potential scaling in AICCRA ▪To reach out to more than 250 communities (gender sensitive) ▪ Region selection, fieldwork, community interactions, current experience from communities (Survey prepared by IWMI on flood insurance feasibility), stakeholder meetings (private sectors + insurance companies) and discuss the role of IBFI and their interest ▪Model development + Parameters (Flood Depth, duration, extent – complemented using RS data) ▪Co-design and Co-implement IBFI with the insurer and ACRE Africa www.cgiar.org Pilot: Lower Magoye River in Mazabuka District • Flood-affects: ✓ Households displacement, ✓ Crop fields, ✓ Livestock. • Affected Villages: ✓ Kalama ✓ Munenga, ✓ Mwanachingwala ✓ Itebe www.cgiar.org Discharge data 0 20 40 60 80 100 120 0 1 /0 1 /2 0 0 1 2 8 /0 9 /2 0 0 3 2 4 /0 6 /2 0 0 6 2 0 /0 3 /2 0 0 9 1 5 /1 2 /2 0 1 1 1 0 /0 9 /2 0 1 4 0 6 /0 6 /2 0 1 7 0 2 /0 3 /2 0 2 0 2 7 /1 1 /2 0 2 2 D is c h a rg e ( m 3 /s e c ) Date Observed Discharge ▪ WARMA data from Magoye River at Chimbumbu’s Farm station ▪ Data is calculated based on the stage-discharged relationship ▪ Data available from 2021 to the present, but model was developed for three wet season, 2007/8, 2008/9 and 2022/23 (Red Rectangle). www.cgiar.org Developing Index Based Parametric Insurance (IBPI) Flood model simulation using observed flow data from WARMA • Flood depth propagation along the valley • Close to upstream location flood depth greater than 1 m, with narrow flood extent, confined to the river reach • As flood propagates downstream section, flood spreads with flood depths less than 1 m. www.cgiar.org Developed Flood depth 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 0 1 /0 1 /2 0 0 1 0 1 /0 1 /2 0 0 2 0 1 /0 1 /2 0 0 3 0 1 /0 1 /2 0 0 4 0 1 /0 1 /2 0 0 5 0 1 /0 1 /2 0 0 6 0 1 /0 1 /2 0 0 7 0 1 /0 1 /2 0 0 8 0 1 /0 1 /2 0 0 9 0 1 /0 1 /2 0 1 0 0 1 /0 1 /2 0 1 1 0 1 /0 1 /2 0 1 2 0 1 /0 1 /2 0 1 3 0 1 /0 1 /2 0 1 4 0 1 /0 1 /2 0 1 5 0 1 /0 1 /2 0 1 6 0 1 /0 1 /2 0 1 7 0 1 /0 1 /2 0 1 8 0 1 /0 1 /2 0 1 9 0 1 /0 1 /2 0 2 0 0 1 /0 1 /2 0 2 1 0 1 /0 1 /2 0 2 2 0 1 /0 1 /2 0 2 3 Fl o o d d ep th ( m ) Date Munenga flood depth 2001 to 2023 Point1 Point3 Point4 Point8 Point9 Point11 Point12 Point21 Point22 Point31 Point32 Point34 www.cgiar.org Opportunities and Challenges Under AICCRA-Zambia and soil accelerator projects, we are planning to scale up the product in partnership with ACRE Africa, focusing on areas vulnerable to excessive rainfall, Flash floods, and river floods leading to crop failure and damage. From the Pilot Work in the Mazabuka District: • 250 farmers from the three Villages will cover for this year’s floods • Scalability: This work can apply in different parts of Africa, currently being implemented in South Sudan, planning to implement in Malawi and Ethiopia. • Affordability challenge for smallholder farmers—the insurance premiums are simply too high • The scale of impact is too low, and piloting for a Large area is expensive. To address this, we see an opportunity to bundle the insurance with the accelerator program you are running in Zambia. This approach could provide several key benefits: 1. Reducing the financial burden on farmers by integrating premiums into existing bundle structures (Agricultural inputs such as Seeds, Fertilizers, Agri Loans program, …). 2. Lowering implementation costs by leveraging existing financial mechanisms. 3. Ensuring the sustainability of the innovation by creating a more accessible and scalable model. 4. Scale up the product to reach out to more farmers www.cgiar.org I would like to discuss the following with you: • How does parametric insurance align with your scaling work? • How do you see the potential for partnership to bundle this risk solution in Zambia and potentially Malawi? Slide 1: Bundling Parametric Insurance to Build Climate Risk Resilient Community: Experience from IBFI Application in Zambia Slide 2: Parametric Insurance Slide 3: Why Parametric Insurance in Zambia: EO Flood Inundation Mapping in Zambia Slide 4: Developing Index Based Parametric Insurance (IBPI) Slide 5: The Scope Slide 6: Pilot: Lower Magoye River in Mazabuka District Slide 7: Discharge data Slide 8: Developing Index Based Parametric Insurance (IBPI) Slide 9: Developed Flood depth Slide 10 Slide 11: Opportunities and Challenges Slide 12