The Lagos State government has launched a parametric flood-risk insurance policy covering up to 4 million vulnerable people, securing up to US$7.5 million for flood response and recovery. This initiative is part of the Tripartite Agreement Programme, a public-private partnership involving the United Nations Development Programme (UNDP), the Insurance Development Forum (IDF), and Germany’s BMZ through the InsuResilience Solutions Fund (ISF), designed to strengthen climate resilience in developing countries.
Lagos, with over 22 million residents, faces increasing flood risks due to climate change and rapid urbanization, particularly affecting low-income households, which make up 80 percent of the population. Insurance penetration in the city is below 0.5 percent. Launched in 2022, the project aims to mobilize financial resources to help communities prepare for and recover from climate-related impacts.
Governor Babajide Olusola Sanwo-Olu emphasized that climate inaction could cost Lagos nearly US$40 billion by 2050, threatening lives, infrastructure, wetlands, and biodiversity. The parametric flood insurance policy strengthens the state’s capacity to protect residents, embed climate risk management in development planning, and secure public finances for flood response.
The insurance product was developed by IDF member organizations in partnership with the Lagos State Government, including AXA Climate, AXA Mansard Nigeria, Swiss Re, JBA Risk Management, ICEYE, and African Risk Capacity Ltd. It is co-funded by ISF and IDF members, with technical and policy support from UNDP Nigeria and local government agencies such as the Office of Sustainable Development Goals, Ministry of Finance, Ministry of Budget and Economic Planning, and the Lagos State Emergency Management Agency (LASEMA).
The policy enables rapid access to funds for emergency response, disaster relief, and direct cash transfers in seven local government areas. It incorporates modern technology, including space-based flood observations, to ensure timely activation and coverage for underserved communities. Premium financing is supported 90 percent by ISF in the first year, with Lagos State committed to increasing its contribution in subsequent years to ensure sustainability.
UNDP and partners highlight that this policy demonstrates how embedding insurance in public planning can strengthen support for vulnerable communities while promoting inclusive, climate-resilient development. The solution also offers a blueprint for scaling flood-risk insurance to other Nigerian states and climate-vulnerable cities worldwide, supporting faster recovery, financial resilience, and long-term protection against climate disasters.
