With poverty levels high and communities repeatedly battered by climate shocks, the country faces a daunting challenge: how to protect its most vulnerable people from an increasingly volatile climate while the international humanitarian funding system is stretched thin.
A new project aims to help answer that question – by putting pre-arranged, trigger-based insurance at the heart of disaster preparedness.
The Case for Innovation
Despite a long history of community resilience and humanitarian response, Malawi has never had an insurance product to cover flooding. Existing social safety nets like the Social Cash Transfer Programme are vital but limited – they’re not designed to cover the large-scale economic and human costs of repeated disasters. And while drought insurance has been piloted, flood events remain uncovered.
That’s about to change.
Led by the Malawi Red Cross Society (MRCS) and the Danish Red Cross (DRC), and in collaboration with African Risk Capacity (ARC), JBA Risk Management, and the InsuResilience Solutions Fund (ISF), a new project is testing a parametric insurance product tailored specifically to extreme floods. The aim? To ensure faster, more predictable response funding – helping communities recover faster and better.
A New Model of Flood Resilience
The initiative brings together several moving parts:
- A custom flood model adapted to Malawi’s local risks, integrating rainfall and impact-based forecasts.
- Trigger mechanisms for action and funding of early early action, response and recovery – tied to national and community-level contingency plans.
- Capacity-building for local disaster committees (ADRMCs), including hazard mapping, cash preparedness, and early warning systems.
This isn’t just about financial products – it’s about creating a comprehensive disaster risk financing framework that links data, decisions, and delivery. The project connects early warnings with early action, and recovery planning with ready-to-deploy funds.
The model being developed in Malawi could be a game-changer, not only for the country but also as a scalable template for other flood-prone regions.
How It Works
The insurance system is structured around several key triggers:
- Early action – Activated based on forecasted hazards.
- Emergency response – Insurance triggered by the actual hazard, response activities may include Search and Rescue, shelter, Non-food Items (NFIs) and cash transfers as defined in the contingency plans.
- Recovery and reconstruction – Confirmed by real-time damage assessments the final payout supports long-term recovery, including rebuilding schools, clinics, and livelihoods.
These triggers are tied directly to contingency plans, updated and implemented by local disaster committees – equipped with mobile technology to communicate and act swiftly.
In a region where floods are no longer the exception but the norm, this project represents a bold new approach: turning disaster risk into something that can be planned for, paid for, and responded to—before lives and livelihoods are lost.
For more information on the project, partners, and progress, stay tuned for updates via the Malawi Red Cross Society and Danish Red Cross channels.
