Cornerstone Insurance Plc has reaffirmed its commitment to climate resilience through its participation in the Lagos Flood Risk Transfer Scheme, an insurance initiative expected to provide financial protection to approximately four million residents across Lagos State.
Rising Flood Risks in Lagos
Flooding remains a major environmental and economic challenge in Lagos, disproportionately affecting low-income and vulnerable communities. As a coastal city with an average elevation of just 1.5 metres above sea level, Lagos faces heightened exposure to flooding caused by rising sea levels, land subsidence, rapid urbanisation, and inadequate drainage systems often obstructed by waste.
Seasonal flooding, particularly between April and July, continues to disrupt infrastructure, businesses, and livelihoods. Estimates suggest that the economic impact of flooding in Lagos approaches $4 billion annually.
The Flood Risk Transfer Scheme
To address these risks, the United Nations Development Programme and the Insurance Development Forum, with funding support from the German Federal Ministry for Economic Cooperation and Development (BMZ), developed the Lagos Flood Risk Transfer Scheme in collaboration with the Lagos State Government.
The initiative introduces a parametric insurance model designed to provide rapid financial assistance to affected communities. Unlike traditional insurance, payouts are triggered automatically when predefined flood conditions are met—in this case, when flood depths reach 50 centimetres.
The scheme is based on a flood footprint index, developed through extensive modelling to reflect Lagos’ exposure to pluvial, fluvial, and coastal flooding risks.
Insurance Backing and Implementation
Following approval by the National Insurance Commission, the scheme is being underwritten by Cornerstone Insurance alongside three other insurers, with reinsurance support from Africa Re.
Commenting on the initiative, Managing Director Stephen Alangbo stated that the company’s involvement reflects its commitment to delivering innovative solutions that enhance resilience and support faster recovery for communities affected by climate-related risks.
Government Support and Long-Term Sustainability
The Lagos State Government has committed to supporting the scheme through phased premium payments over the next three years. The initiative has also been integrated into the state’s broader disaster management framework, strengthening coordinated efforts in preparedness, response, and recovery.
Expanding Financial Protection
The Lagos Flood Risk Transfer Scheme represents a growing shift toward risk-sharing mechanisms between governments, insurers, and international development partners. By combining technology-driven insurance models with public sector support, the initiative aims to reduce the financial burden of flooding, improve recovery times, and strengthen long-term resilience among at-risk populations.
