Climate change, once seen as a distant global concern, has become a pressing daily reality for many communities in West Africa. The impact is now visible in rising sea levels, recurring floods, droughts, and heatwaves that continue to disrupt lives, economies, and industries. In response to these challenges, insurance leaders from across the region recently gathered in Lagos to discuss how to adapt their business models and provide sustainable protection for policyholders.
A report by the World Economic Forum in 2019 listed Lagos State among the 11 low-lying cities in the world at risk of disappearing by the year 2100 if creative measures are not taken to combat flooding and coastal erosion. Lagos ranked second on the list, behind Jakarta, due to its eroding coastline and the impact of rising sea levels driven by global warming. Other cities mentioned included Houston, Dhaka, Venice, Alexandria, and Miami.
The concern is not new. A 2012 study by the University of Plymouth warned that sea level rise between three and nine feet would have a “catastrophic effect” on human activities in these regions. Today, those fears are becoming reality as rainfall extends well into October and flooding occurs more frequently—not only in Lagos but across Nigeria and neighbouring countries in West Africa.
For insurers, these climate shifts have changed the risk landscape. The industry, which has long focused on transferring losses, now faces a new challenge—how to drive national and regional resilience in the face of growing financial disasters.
At the 2025 West African Insurance Companies Association (WAICA) Education Conference held in Lagos, Zillah Malia, Senior Manager of Climate Finance at FSD Africa, presented alarming statistics. She said, “Africa faces between $30 billion and $50 billion in annual losses from climate disasters, yet our insurance penetration remains under three per cent. Seventeen out of the 20 countries most threatened by climate change are in Africa.”
Malia described the insurance industry as a “triple enabler”—acting as a risk manager, underwriter, and investor. She said that sustainable insurance must play a key role in leveraging capital for resilience. “Africa’s insurance market holds huge potential,” she said. “To seize this opportunity, the sector must pursue policy alignment, product innovation, capital mobilisation, and capacity building.”
She also urged insurers to direct their massive investment portfolios toward green growth. “Insurers manage trillions in assets. By investing in adaptation, renewable energy, and sustainable infrastructure, we can reduce climate risks and grow our economies.”
Speaking at the same event, the Immediate Past Deputy Minister of Finance of Sierra Leone, Mr. Bockarie Kalokoh, emphasised the interconnected nature of climate risks in West Africa—from Sahel droughts to floods in coastal cities. “A drought does not just reduce crop yield,” he said. “It affects food security, water, energy, and even financial stability. We must start seeing these risks as part of a system.”
Kalokoh noted that the global protection gap remains wide, with 65 per cent of global disaster losses uninsured. He warned that increasing natural disasters, coupled with regulatory pressures and limited capacity, were leading to “insurance deserts” where coverage is unaffordable or unavailable.
He called for insurers to re-evaluate their role, saying, “We must see insurance as society’s main financial risk manager. The industry must lead the response to climate change by providing risk information, supporting adaptation, and developing innovative products such as parametric insurance.”
He cited the Lagos State Government’s $7.5 million parametric flood insurance project, developed with support from the United Nations Development Programme, Germany’s BMZ, and the Insurance Development Forum, which is expected to provide quick financial relief to about four million residents during major flooding events.
Kalokoh also highlighted the African Climate Risk Facility, where 85 insurers have pledged to provide $14 billion in climate coverage by 2030, potentially protecting 1.4 billion people across Africa from floods, droughts, and cyclones.
The Group Managing Director of Custodian Investment Plc, Mr. Wole Oshin, gave a practical view of the challenge. He said, “We have seen what used to be extraordinary weather events become normal. These are not just humanitarian issues; they are business realities. They test our models, our capital, and our ability to manage risk sustainably.”
Oshin recalled Nigeria’s 2022 floods, which affected 33 states, killed over 600 people, and displaced more than 1.4 million. He said insurers suffered heavy losses due to poor risk mapping and over-reliance on reinsurance. “Underwriting must shift from pricing average years to surviving volatile decades,” he warned.
He urged insurers to adopt detailed risk selection, zoning, and the Own Risk and Solvency Assessment (ORSA) framework to prepare for multiple disaster events. “We must be the insurers who show up when the rain is falling and help rebuild when the skies are clear,” he said.
Representing the Federal Government, the Minister of State for Finance, Dr. Doris Uzoka-Anite, said the government recognises insurance as a pillar of Nigeria’s financial system. She announced that President Bola Tinubu has signed the Nigerian Insurance Industry Reform Act 2025, which strengthens insurers’ capital base, enhances consumer protection, and expands compulsory insurance in sectors such as agriculture and infrastructure.
She also urged regional collaboration through WAICA, noting that “the same storms that affect Nigeria affect Ghana, Sierra Leone, Liberia, and The Gambia. Our solutions must be collective.”
In her remarks, Adetola Adegbayi, Founder and CEO of Mutual Specialists, called on insurers to realign their corporate culture and business models to confront climate change. She said the industry must accept its role in shaping climate outcomes and adopt strategies for adaptation and sustainability.
Experts at the conference agreed that the future of insurance in West Africa depends on innovation, collaboration, and strong regulatory frameworks that align financial growth with environmental resilience.
