Britam Fastrack Climate Insurance in Wake of Climate Change Risks

In the face of mounting climate change challenges, the insurance industry in Kenya is stepping up its efforts to mitigate associated risks and bolster resilience.

Recognizing the urgent need for action in a country vulnerable to climate-related disasters such as droughts, floods, and extreme weather events, insurers are pioneering innovative solutions to protect both their clients and the environment.

With Kenya's economy heavily reliant on agriculture and natural resources, the impacts of climate change pose significant threats to livelihoods, infrastructure, and economic stability.

Against this backdrop, insurance companies are increasingly integrating climate risk considerations into their business models, product offerings, and risk management strategies.

Britam, alive to the dangers posed by the ever-changing climate, rolled out climate change insurance in an array of paradigms, including crop and flood insurance, in light of the flooding catastrophe Kenya is prone to, with the latest one claiming over 300 lives.

"Britam has climate Insurance products that are focused on adaptation and we have three main categories of products I think the most Innovative and a very interesting product is a flood insurance product that we launched last year in Tana River in Partnerships with the Oxfam which is an international NGO as well as swissri, which is a global reinsurance company and provides us reinsurance support. This product was launched last year on a pilot basis and we of course selected Tana River because it is a very flood prone area," said Britam's Director for Emerging Consumers Saurabh Sharma.

He advised that, although the adverse ravages of climate change are still in their early stages in the country, there is a dire need to stop in and use all the means to derisk the situation, which he maintains can only be done through insurance.

"This kinds of products can be used to protect businesses or any kind of losses. I would say those are the two broad categories of products in Kenya. I think climate change to be honest is still in its early stages," added Sharma.

The insurer adds that by utilizing advanced meteorological data and technology, insurers can offer affordable and accessible insurance solutions to farmers and other vulnerable communities, helping them recover from climate-related losses and build resilience against future shocks.

Collaboration is also key to the insurance industry's climate change mitigation efforts in Kenya, and Britam has collaborated with non-governmental organizations (NGO's) like Oxfam and devolved units, as well as the national government, to share expertise, leverage resources, and develop coordinated strategies for climate resilience and adaptation.

By working together, stakeholders can maximize the impact of their interventions and address systemic challenges more effectively.

Furthermore, Britam says it is increasingly integrating environmental, social, and governance (ESG) criteria into their investment decisions, aligning their portfolios with sustainable development goals and climate objectives.

By divesting from high-carbon assets and allocating capital to climate-friendly projects and initiatives, insurers can not only reduce their exposure to climate risks but also drive positive environmental and social impact.

The regulatory environment is also evolving to support climate change risk mitigation in the insurance sector, a factor Britam says it's keen on.

The Insurance Regulatory Authority (IRA) of Kenya has been proactive in promoting sustainable insurance practices, issuing guidelines and directives that encourage insurers to incorporate climate risk considerations into their operations and governance frameworks.