The first-ever flood insurance scheme is going to be introduced soon in the country, aiming to compensate flood victims and help them fight natural disasters. Oxfam Bangladesh has initiated a pilot project to design a commercially pragmatic catastrophic flood insurance scheme for the poor and vulnerable, targeted to sensitise meso-level investors who are working in pro-poor river basin flood-prone areas.
Initially, the project will be introduced in Sirajganj district. The scheme will be piloted in 14 villages across four unions in Sirajganj Sadar and Chowhali upzilas of the district, according to the sources at Oxfam Bangladesh.
Meanwhile, a collaborative design and research study has been embarked by Oxfam and the India-based Center for Insurance and Risk Management (CIRM) for developing a meso-level catastrophic flood insurance scheme in Bangladesh.
The Institute of Water Modelling (IWM) of Bangladesh has built a flood hazard model used to generate flood data. The Swiss Development Corporation (SDC) will finance the project while Manab Mukti Sangstha (MMS), a local partner organisation of Oxfam, will implement it in Sirajganj soon.
M Norul Amin, Oxfam GB Bangladesh’s Economic and Private Sector coordinator, told UNB that Bangladesh is a flood-prone country and suffers from large scale flooding episodes periodically, which is one of primary reasons for widespread poverty.
Over the last decades, the government together with international agencies and local partners has been working on building structural solutions to counter the losses caused by floods, he said. Norul Amin, who is leading the flood insurance scheme, said structural solutions, although effective, cannot provide complete protection against catastrophic floods.
“This leaves the economy and people vulnerable to such flooding incidents. Catastrophic flood insurance can be an effective tool, which can complement the risk reducing structural solutions.” He said it will be a tool to improve calamity response of Community Based Organisations (CBOs), NGOs and the government.
“If the government, local government bodies, private sectors and development agencies transfer risk, especially catastrophic risks to a formal risk carrier (Financial or Social Institution); the disaster management and risk reduction efforts of the country will improve along with the ability of the government and development agencies to invest more in disaster risk reduction,” he said. Oxfam coordinator said although crop insurance is introduced in many other countries across the world, the flood insurance concept for the first time is going to be introduced. “The scheme will be launched at a programme tomorrow (Tuesday).”
According to a flood expert, the lack of flood loss data and flood hazard models make it difficult to calculate the risks and determine the premium for any such insurance scheme. But, developing a full-fledged flood hazard model is costly and cannot be supported by the insurance companies. Sardar Shah Newaz, director of Flood Division at IWM, told UNB that flood is common in Bangladesh as it hits the country each year, causing a huge loss in property and crop damage.
“Flood insurance is a new concept. The project is going to be implemented on trial basis in this flood season. If it brings good results, the scheme could be introduced across the country,” he said. Sardar Shah Newaz who prepared the IWM model said flood insurance premium and its policy will be determined in accordance with the depth and duration of flood. “If the flood duration is less than 10 days, people won’t be given compensation.”
The project model, designed by IWM, predicts only the floodwater level or depth instead of flood losses. Developing such a model is relatively cheaper and time effective. The data generated by this model will be used in determining the premium for the insurance scheme.
The model will also act as a floodwater level/depth measuring tool to calculate compensation based on pre-determined formulae, thus eliminate requirement of physical monitoring of flood depth and claim filing by the client.
Distribution of compensation to individual household is impossible during floods. The project bypasses this problem by utilising MMS-CBO structure build by programmes such as Oxfam’s Resilience through Economic Empowerment, Climate Adaptation, Leadership and Learning (REE-CALL) project. In this project, the compensation will reach the poor and extremely poor CBO member households through MMS, the local partner of Oxfam, the sources said. – UNB
