06 AUG 2025
Reuters · 5 min · Analysis
Reuters: Sweeping Reforms Coming to Insurance Sector
Nigerian insurers are piloting parametric flood insurance for households and SMEs in high-risk areas, starting with clusters in Lagos and Bayelsa. Unlike traditional policies, payouts are triggered automatically when an agreed flood index crosses a threshold, speeding up relief and cutting paperwork.
How parametric flood cover works
- Objective triggers: satellite rainfall, river-gauge levels, or water-depth sensors define when a payout is due.
- Fast payouts: once the index breaches the trigger, payments are processed without loss assessment visits.
- Transparent pricing: premiums reflect location risk bands and historical flood frequency.
Brokers say the product is designed to complement existing property policies by filling gaps in catastrophe response. For micro and small businesses, faster liquidity after a flood can reduce downtime and inventory losses, improving resilience.
“Speed matters after floods. Parametric triggers move cash to customers when they need it most.”
Market Watch — Nigeria
What to check before you buy
- Trigger definition and data source (e.g., rain gauge vs. satellite precipitation).
- Payout table: amount paid at each trigger level and annual maximum benefit.
- Waiting period, geographic coordinates covered, and exclusions.
Rollout will expand through insurers and partners in states with recurring seasonal flooding. Customers can bundle parametric flood with existing fire or homeowners’ cover for broader protection.
