Scores of stakeholders from government institutions have undergone training in parametric insurance and disaster risk financing as part of efforts to strengthen Ghana’s preparedness for climate-related disasters, particularly flooding.
The four-day capacity development programme, organised by the National Disaster Management Organisation (NADMO) and the Ministry of Finance in collaboration with the United Nations Development Programme (UNDP), is being held from August 24 to 27, 2026, at the Capital View Hotel in the Eastern Region.
The training, dubbed “UNDP Ghana Capacity Development Training on Disaster Risk Financing, Flood Risk Modelling, Technical Assistance Deployment and Payout Management,” brought together representatives from Ministries, Departments and Agencies (MDAs), NADMO, the National Insurance Commission (NIC), Ghana Statistical Service (GSS), National Development Planning Commission (NDPC), Ghana Hydrological Authority and Metropolitan, Municipal and District Assemblies (MMDAs) within the Greater Accra Metropolitan Area.
The programme is designed to strengthen institutional knowledge and practical capacity in disaster risk financing, flood risk modelling and the management of financial protection mechanisms.
On the second day of the programme, consultant Dr Yazidu Ustarz took participants through the principles of parametric insurance, including how predefined triggers determine insurance payouts.
He explained that parametric insurance differs from conventional insurance because payouts are based on the occurrence of a measurable event reaching an agreed threshold rather than an assessment of the actual damage suffered.
Using flooding as an example, Dr Ustarz said a parametric flood insurance policy for an institution such as NADMO could specify a particular rainfall or river-level threshold.
Once the agreed threshold is reached, based on data from an approved weather station, satellite or other agreed measurement system, the insurer can make the predetermined payment without necessarily sending an adjuster to assess the physical damage.
He said the central question in parametric insurance was whether the agreed event had reached the predetermined trigger.
According to him, parametric insurance can be designed to cover a range of risks, including floods, droughts, hurricanes and strong winds, agricultural losses, earthquakes and travel or aviation disruptions.
For instance, drought insurance could trigger a payout when rainfall falls below a specified level, while flood insurance could make a payment when rainfall or river levels exceed an agreed threshold.
Dr Ustarz said one of the major advantages of parametric insurance was the potential for faster payouts because the payment mechanism was linked to independently verifiable data rather than a lengthy claims assessment.
He, however, cautioned participants about false basis risk, which occurs when the insurance trigger does not perfectly correspond with the actual loss experienced.
He explained that a policyholder could suffer significant damage without the agreed trigger being reached, resulting in no payout.
Conversely, a trigger could be reached even when the actual impact of the event was relatively small which can be called false positive basis risk.
He therefore stressed the importance of selecting appropriate triggers, measurement systems and thresholds when designing parametric insurance products.
The National Coordinator of the Insurance and Risk Finance Facility (IRFF) at UNDP Ghana, Dr Amina Sammo, described disaster risk financing as more than a financial instrument, saying it was an important component of sustainable development.
She said millions of people remained vulnerable to the effects of disasters and that a single flood, failed harvest or other economic shock could wipe out years of progress made by families and communities.
Dr Sammo said resilience depended on strong institutions, effective policies, reliable data, early warning systems and financial mechanisms that enabled individuals, businesses and governments to recover more quickly after disasters.
She identified disaster risk financing as a critical tool for protecting livelihoods, supporting small businesses, encouraging farmers to invest with greater confidence and helping governments manage the fiscal risks associated with disasters.
According to her, the UNDP, through its Insurance and Risk Finance Facility, continues to work with countries around the world to strengthen financial resilience through innovative insurance and risk financing solutions.
The training is expected to equip participating institutions with practical knowledge to improve Ghana’s ability to anticipate, finance and respond to the financial consequences of climate-related disasters, particularly flooding.
