‘Prioritise risks posed by climate change’
By Isaac AIDOO, Accra
ACTING Commissioner of Insurance at Ghana’s National Insurance Commission (NIC), Mr. Michael Andoh, has urged insurance companies in West Africa to prioritize addressing the pressing risks posed by climate change.
Speaking at the West African Insurance Companies Association (WAICA) Education Conference, he stressed the severe impact of climate change on the region’s financial sector, particularly the insurance industry, and called for collaborative strategies to mitigate these challenges.
“Even though sub-Saharan Africa emits very little carbon, it suffers significantly from the physical disasters and other negative impacts of climate change,” Mr. Andoh said.
He noted that the insurance sector faces both physical risks, such as property damage from floods and droughts, and transitional risks tied to adapting business models to a changing climate.
Climate Change: A Growing Threat
The West African sub-region, heavily reliant on agriculture for employment and GDP, is particularly vulnerable to climate-related disasters. These disruptions pose significant risks to the financial viability of insurance companies, which are expected to bear the brunt of claims from affected sectors.
Mr. Andoh called for innovative and practical solutions, emphasizing that insurers must not only mitigate risks but also explore opportunities in climate-resilient savings and investments. He highlighted the importance of deploying technology and innovation to enhance risk assessment and mitigation, leveraging tools like artificial intelligence and big data analytics.
A Call for Collaboration
The Acting Commissioner proposed collective action among WAICA member companies to address these challenges effectively. He suggested the creation of a common fund to sponsor research and capacity building in climate risk mitigation, as well as investment in cutting-edge technology.
“Considering the size and capacity of the average insurance company in the sub-region, it would be interesting for WAICA to initiate a joint action to enable member companies to contribute to such a fund,” he added.
The Bigger Picture
Mr. Andoh’s remarks come at a time when global environmental challenges are reshaping the insurance landscape. He underscored the need for West African insurers to align with international best practices while tailoring solutions to the region’s unique challenges. As the effects of climate change continue to mount, the call for robust strategies, innovative solutions, and regional collaboration is a critical step in safeguarding the sustainability of the insurance sector in West Africa.
