Climate change, once a distant environmental concern, has now become an urgent financial crisis for West Africa’s insurance industry. At the 2025 West African Insurance Companies Association (WAICA) Education Conference in Lagos, industry leaders, policymakers, and development partners gathered to confront a stark reality: climate risks could cost the region as much as $50 billion annually. From floods in Lagos to droughts in the Sahel, the mounting frequency of natural disasters is pushing insurers to rethink their traditional business models and take on a central role in national resilience.
According to Zillah Malia, Senior Manager for Climate Finance at FSD Africa, the continent faces an “unprecedented financial pressure” despite contributing less than 4% of global greenhouse gas emissions. “Africa faces $30–50 billion in annual losses from climate disasters, yet our insurance penetration remains below 3%,” she said. Malia emphasized that insurers must evolve from mere risk carriers into triple enablers — as risk managers, underwriters, and investors. With trillions in assets under management, she noted, insurers have the power to channel capital toward green growth, renewable energy, and sustainable infrastructure projects.
Speakers at the conference underscored the urgency of reform. Bockarie Kalokoh, former Deputy Finance Minister of Sierra Leone, warned that climate risks are now interconnected across the region. “A drought does not only affect crops — it impacts food security, energy production, and financial stability,” he explained. He cited the growing “protection gap,” noting that only 35% of the world’s $357 billion in climate-related losses were insured in 2023. Kalokoh highlighted innovations like the $7.5 million Lagos State parametric flood insurance product, designed with support from the UNDP and Germany’s BMZ, as examples of how Africa can bridge the gap between vulnerability and resilience.
The private sector echoed these concerns. Wole Oshin, Group Managing Director of Custodian Investment Plc, described how “extraordinary” weather events have become alarmingly routine. He recalled the 2022 floods that killed over 600 Nigerians and displaced 1.4 million people. Similar tragedies in Ghana, Sierra Leone, and across the Sahel have battered insurers’ balance sheets, straining solvency and reinsurance capacity. “Underwriting must shift from pricing for average years to surviving volatile decades,” Oshin urged, calling for data-driven mapping and localized disaster modelling to better assess risk exposure.
In response, the Nigerian government is moving to fortify the sector. Minister of State for Finance, Dr. Doris Uzoka-Anite, announced the Insurance Industry Reform Act 2025, signed by President Bola Tinubu, which expands compulsory insurance to key sectors like agriculture and infrastructure. She emphasized the need for regional cooperation through WAICA to pool risks and strengthen reinsurance frameworks. As Adetola Adegbayi, CEO of Mutual Specialists, concluded, insurers must go beyond policy adjustments to embrace a new corporate mindset, one that acknowledges humanity’s role in climate change and adapts business models to a warming world. “We must not only insure against the storm,” she said, “but help build the systems that can weather it.”