Stonestep

Introducing Index-based flood insurance, as risk transfer instruments for the flood prone communities of lower Karnlai, Nepal

IT equipment handover

Project funded by: InsuResilience Solution Fund (ISF) and Swiss Capacity Building Facility (SCBF) (March 2021 – April 2024)

Project Objective: To enhance the resilience capacity of smallholder farmers residing in flood-prone areas through an innovative risk transfer product.

Consortium Partners: Practical Action, Shikhar Insurance Co. Ltd., and Global Parametrics

Distribution Partners: 47 community-based cooperatives across Rajapur Municipality, Madhuwan Municipality, and Geruwa Rural Municipality in Bardiya district, and Tikapur Municipality and Janaki Rural Municipality in Kailali district, Nepal.

Project Activities and Achievements:

  1. Flood Risk Modelling:
    • Conducted comprehensive risk and vulnerability assessments across flood-prone areas in Rajapur, Madhuwan, Geruwa, Tikapur, and Janaki municipalities.
    • Designed a flood risk model combining measured data from the flood gauge station at Karnali Chisapani, risk and vulnerability assessment findings, and remote sensing data.
    • The risk model identified exposure, intensity, and frequency of disasters in the targeted areas.
  1. Development and Approval of Index-Based Flood Insurance product:
    • Developed an Index-Based Flood Insurance product based on the findings from the risk model.
    • Secured approval from the Nepal Insurance Authority.
    • Piloted the product during the monsoon of 2022 and scaled it up in 2023, obtaining unconditional approval for continued operation.
  1. System Design and Capacity Building:
    • Stonestep designed backend and frontend systems for process digitization to enhance accessibility for poor and vulnerable populations.
    • Implemented the system through 47 partner cooperatives.
    • Enhanced the cooperatives’ capacity in IT solutions for insurance administration and capital management for effective management of the Index-Based Flood Insurance product.
    • Cooperatives were trained to handle group policies to benefit their customers.

Project Outputs:

  • 47 cooperatives were capacitated in insurance administration processes for the Index-Based Flood Insurance product.
  • Secured unconditional approval for the Index-Based Flood Insurance product, ensuring continued operation in the targeted areas.
  • Over 18,000 individuals were educated on the Index-Based Flood Insurance product and insurance principles.
  • 6,446 households were insured under the Index-Based Flood Insurance product.
  • 935 households received loss coverage, amounting to 25% of the total sum insured.