West African insurance firms are taking heavy financial hits as climate change fuels more frequent and severe natural disasters, leaving the industry’s balance sheets under pressure.
Group Managing Director of Custodian Investment Plc, Mr. Wole Oshin, sounded the alarm at a regional insurance conference in Lagos themed “The West African Insurer in the Face of Climate Change.”
Oshin revealed that what were once considered “once-in-a-century” disasters are now happening every few years — with devastating consequences for both people and insurers.
“In 2022, Nigeria suffered its worst floods in a decade. Thirty-three of the country’s 36 states were affected, more than 600 lives lost, and over 1.4 million people displaced,” Oshin said. “For insurers, these are not just humanitarian crises — they are defining business challenges.”
He noted that climate volatility is now reshaping the core of the insurance industry, affecting underwriting assumptions, claims frequency, solvency capital, and reinsurance structures. “It tests our risk models, strains our capital, and challenges our ability to price and transfer risk sustainably,” he added.
Across West Africa, extreme weather events are fast becoming the norm. Ghana’s 2015 floods killed over 150 people; Sierra Leone’s 2017 mudslide claimed more than 1,100 lives; while Niger, Chad, The Gambia, and Senegal continue to battle droughts, heatwaves, and coastal erosion that threaten livelihoods and infrastructure.
“These are not theoretical risks — they’re real events hitting real balance sheets,” Oshin warned. “Floods, storms, and heatwaves are driving up claims, eroding capital, and testing the resilience of insurers across the region.”
Despite the mounting challenges, Oshin urged insurers to see opportunity in adversity. He called on the industry to innovate with parametric insurance, regional risk pools, and green investment strategies that align with the realities of a changing climate.
He also emphasised the need for better underwriting discipline — citing how insurers in Lagos can use elevation data to distinguish between lagoon-front and inland properties — and faster claims settlement to rebuild public trust.
“Claims are the trust engine of insurance,” he said. “When disasters strike, insurers must be visible, proactive, and compassionate. Delayed claims erode confidence, while swift, transparent payouts build credibility.”
On solvency, Oshin stressed that “capital matters more than ever” as unpredictable risks strain financial buffers. He recalled that the 2022 floods cost Nigeria’s insurance industry billions of naira in gross losses, exposing weaknesses in risk modelling and overdependence on delayed reinsurance recoveries.
“Climate volatility is here — and it’s intensifying,” Oshin concluded. “Our customers and economies need insurers who show up when the rain is falling, and stay to rebuild when the skies clear. By combining data-driven risk management, strong capital, and empathy, we can transform today’s crisis into tomorrow’s leadership opportunity.”
