Malawi faces recurring flood risk driven by intense seasonal rainfall, complex river systems and exposure in densely populated floodplains. When a flood occurs, access to emergency funds can be slow and inconsistent, making it challenging for responders to plan and act effectively.
Working with the Danish Red Cross, Malawi Red Cross Society and African Risk Capacity, JBA supported the development of the country’s first parametric flood insurance policy. This innovative disaster risk financing product, funded through the InsuResilience Solutions Fund, is designed to provide a reliable source of funding for rapid emergency response following the most severe floods.
Parametric flood insurance pays out a pre-agreed amount when flooding reaches a certain threshold of severity. Knowing that funding will be available when a serious flood occurs allows disaster risk managers to plan more effectively and enables a faster, more targeted response.
In Malawi, the new parametric insurance policy supports the activities of the Malawi Red Cross Society, which is often among the first responders in communities affected by flooding.
Parametric insurance requires robust risk modelling and carefully designed triggers. These give insurers confidence that their calculations are based on models which accurately reflect real-world flood impacts.
The JBA team developed a national flood risk profile for Malawi using JBA’s Malawi Flood Model and 30m resolution return period flood maps. In a data-scarce context, satellite rainfall data helped fill important gaps in ground observations and supported a more consistent national view of flood risk. The model ran on a customised rainfall-driven event set developed from NASA IMERG satellite rainfall data, alongside vulnerability data collected by the Malawi Red Cross Society. Based on this understanding of how rainfall relates to flood impact, trigger thresholds were set using the number of people affected by flooding and calibrated against historical impact data.
The result was a two-part trigger system that monitors the NASA data for trigger exceedances and then validates these against ground-based gauge observations provided by the Malawi government. This reduced the risk of false alarms, providing a solid basis for project partner African Risk Capacity to structure and place the parametric policy.
Parametric insurance can be a powerful disaster risk management tool, but it requires local expertise and contextual understanding to work well.
An important part of the project was the series of partner workshops held during development and at the close of the project. These sessions helped shape the trigger mechanism, align the policy with the Malawi Red Cross Society’s flood contingency planning, and build a shared understanding of the parametric approach across the consortium and government stakeholders.
Co-designing the policy in this way helped ensure that the insurance product reflected local realities and operational needs, creating cover that was practical, relevant and trusted by the organisations responsible for implementing it. The process also strengthened the capacity of partners in Malawi to use and interpret risk information, understand the role of pre-arranged finance, and integrate parametric insurance within broader disaster preparedness and response planning.
More broadly, the project demonstrates how disaster risk financing can support more resilient disaster management when it is grounded in robust risk analysis and shaped by local needs. The result is a financing mechanism designed to support the Malawi Red Cross Society’s flood response while contributing to wider efforts to strengthen resilience to future flood events.
Contact our team to learn more about this project.
