Flood's Not Just the Problem of the Gov't. Insurers Can Help

Jul 9 , 2022
By Asseged G. Medhin ( Asseged G.Medhin, deputy CEO of Global Insurance Company. )

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No one living miles from the nearest river seriously expects to be hit by floods. But heavy rain can bring the flood to anyone – and with little or no warning. As structural measures offer little protection, the best precaution people can take is suitable natural hazards insurance.

Worldwide, about a third of overall losses resulting from natural catastrophes are attributable to floods, while the focus is on storm surges and flooding goes underreported. Flash floods tend to hit the headlines only in the worst cases that have large fatalities, such as in Dire Dawa a few years ago, while they are becoming a common phenomenon in Addis Abeba.

Flash floods usually occur as independent, localised and random events. It has a destructive power that is often under-appreciated. In the less serious cases, water accumulates in cellars and underground car parks. In the worst of circumstances, it can cause buildings to collapse and increase losses enormously. Given climate change, the risk of flash flooding is growing, increasing the hazard to areas that have not seen this type of natural disaster.

It is thus important to discuss risk management to prepare proactively and reduce the frequency of flooding while reducing its impact.

The government should ultimately reform its traditional way of management and craft a strategy with insurers who could also be stakeholders. The international practice of ensuring climate risks like floods should be practised in Ethiopia as a strategic course correction to adequately distribute risk, protect wealth and reduce the negative consequences to the economy.

City administrations are another responsible stakeholder who seek critical advice in mapping out potential risk areas and should step up to allocate resources to institutions and programmes that promote risk prevention. History should serve as guide in preparing for rainy seasons and tragedies that occur should be carefully audited to ensure that they do not happen again.

No less important are meteorologists who are expected to be above reporting the climate. They should integrate their report with the other stakeholders so that a meaningful risk management strategy on flooding can be developed and constantly updated.

Once the risk is transferred to them, insurers should create awareness from existing and potential clients through continuous seminars and selective panel discussions to spell out climate risk. The insured has the right to have it as and when needed. Not only should insurers suggest practical experiences and exposures for policymakers about mitigating climate risk, they should also underline the critical importance of the industry in addressing the effects and minimising economic impact.

Today, all over the world, risk management is a very crucial point of discussion. Artificial and natural hazards are transforming world resources. COVID-19, war, cyber-security risk, and inflation are creating imbalances between and among nations. We know how some of these, such as inflation, are affecting us and can only estimate the challenges climate change will bring if left to its devices. Time is not on our side.

Undoubtedly, we will have to contend with more extreme weather events in the future. A warmer climate and a higher concentration of water vapour in the atmosphere will increase the amount of rainfall and the likelihood of localised storms, especially in the summer. This does not contradict the general trend toward drier summers in certain regions but indicates greater volatility of precipitation events, particularly over dense urban sectors.

A strategic insight to integrate all stakeholders to mitigate the risk ahead and save future resources should thus be a priority. We need to walk the talk on climate risk so as not to see the loss of life, destruction of property or economic crisis.

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PUBLISHED ON Jul 09,2022 [ VOL 23 , NO 1158]

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