National Flood Insurance Law for Ghana; now or never

The recent floods that hit parts of the country have brought to the fore challenges Ghanaians particularly the vulnerable in the society grapple with in the wake of flood disasters.

Flood victims are left with no basic necessities of life – shelter, food, clothing and water. According to newspaper reports, over 2,000 adults and children have been displaced in Central Region following an incessant rainfall that caused the Offin River to overflow its banks.

The flooding, which began around June 27, inundated 17 communities in the lowland areas of the Dunkwa Municipality. Approximately 150 homes were destroyed, the reports indicated. Flood victims in the North and other areas also suffered similar magnitude of the impact after torrential rains and flood waters from the Bagre Dam.

Responses from Ghanaians towards these flood disasters have been diverse. While some personalities and corporate organisations are contributing their widows’ mite and putting across sustainable innovative ideas to alleviate the plight of our unfortunate brothers and sisters, others are in the business of pointing accusing fingers particularly toward government for the simple reason of ‘not doing enough’.

flood disasters

From time to time flood disasters have created personal hardships and economic distress which require unforeseen disaster relief measures and have placed an increasing burden on national resources.

Despite the installation of preventive and protective works and the adoption of public programs designed to reduce losses caused by flood damage, these methods have not been sufficient to protect adequately against growing exposure to future flood losses.

There is the need as a matter of national policy, a reasonable method of sharing the risk of flood losses through a program of flood insurance which can complement and encourage preventive and protective measures. This is so, particularly when climate change among others is exacerbating the impact of floods.

In 1968 and 1973, US enacted the National Flood Insurance Act, and Flood Disaster Protection Act, respectively, in the awake of devastating floods. Pursuant to the Acts, the US Congress created the National Flood Insurance Program (NFIP) as the government’s response to the rising cost of taxpayer funded disaster relief for flood victims and the increasing amount of damage caused by floods.

The law established a Federal Emergency Management Agency (FEMA) that manages the NFIP and oversees floodplain management and mapping of flood prone zones to determine the extent to which flooding might threaten any given area of land, with the cooperation of participating communities.

Over 20,000 communities across the United States and its territories participate in the NFIP by adopting and enforcing floodplain management ordinances to reduce future flood damage.
In exchange, the NFIP makes federally backed flood insurance available to homeowners, renters, and business owners in these communities.

Consequently, flood damage has reduced by nearly $1 billion a year through partnerships with communities, the insurance industry, and the lending industry.

Furthermore, buildings constructed in compliance with NFIP building standards suffer approximately 80 percent less damage annually than those not built in compliance.

And, every $3 paid in flood insurance claims saves $1 in disaster assistance payments. Flood insurance claims and all operating expenses of the program are paid for through premiums. None of these costs are paid by taxpayers.

National Flood Insurance Act

With the enactment of National Flood Insurance Act for Ghana, flood disaster management would be streamlined and people living in flood plains particularly the coastal areas would heave a sigh of relief in times of flood disasters. Accountability and transparency rules for engagement would also be clear.

NADMO would also not be found wanting with the little resource at their disposal since the Insurance fund will be guaranteed resource for her.

Ad hoc measures such as diverting funds from other earmarked programmes would never have been thought of.

Diverting Funds from other coffers, say SADA, to support flood victims in North and probably other parts of the country as speculated by government, would only defeat the idea behind the establishment of such funds.

This called to mind the issue of ring-fencing the flood insurance funds by law to prevent unintended use of it.

In promulgating the National Flood Insurance law, it must a technical unit would mapped out Flood hazard Areas (FHA’s) so that those who are interested in putting up new structures in the FHA’s can access the extent of flooding in the area.

No flood insurance, no structure whatsoever on FHA’s. People already living in these areas must be required by the law to purchase flood insurance.

A lot of insurance companies in country must be allowed by the law to operate alongside state-owned insurance companies to engender competition and efficiency.

On the other hand, insurance companies should be allowed to expand their insurance policy portfolio to cover flood disasters.

However, private insurance companies must be regulated by the National Insurance Commission to ensure fairness.

In this regard, the National Flood Insurance Program would not only be lessening the plight of our unfortunate brothers and sisters but also serve as job creation avenue for the teeming unemployed youth in the country.

Compensation for demolished houses

Compensation for demolished houses of landlords and tenants who are already occupying flood prone areas has always being a nightmare for Metropolitan, Municipal and District Assemblies.

More often than not, revenues for developmental purposes are used for such purposes with little or no accountability and transparency.

Demolishing exercises and compensations for flood victims are always over politicised.

Passing the National Flood Insurance legislation could earmark certain percentage of the fund in times of these exercises to curb the burden on local governments and over politicisation of the exercise.

The issue of cost and affordability often set the tone for discussion and implementation of laudable ideas such as the proposed National Flood Insurance Legislation.

This, often lead such ideas not seeing the light of the day. Research has it that, the poor can pay just as the rich in society. In Ghana for instance, the urban poor pay 10-20 times more for water than the rich who are connected to main pipe line by GWCL, according to Human Development Report 2006/2007.

The challenge with the willingness or the ability to pay by the poor has to do with their saving culture or paying huge sums of money at a go.

What is needed to assist the poor is to put in place innovative insurance payment mechanisms in a manner that would allow them to pay, say on daily or weekly basis.

In order to get secured financing to buy the policy by the poor, Cooperate bodies must also be encouraged under the law to contribute towards the funds and not in ad voc conditions, to subsidize their contribution.

Recently, Vodafone Ghana Foundation launched a Red Alert campaign to assist victims of the recent floods that have hit parts of the country with short code 133, which allows customers of Vodafone to donate GH?1 every time they text the word “help” to the short code.

Although, it is commendable initiative and needed to be emulated by other corporate organisation, without a law instituting accountability and transparency measures to regulate the management of such contribution, funds would be diverted to where it is not intended and in some cases, private pockets.

The Law would therefore streamline the management of corporate donations by channelling them to the National Flood Insurance.

Ghana must take a cue from the proverbial vulture, who keeps postponing the building of her nest for another day. What Ghana needs now is to learn from the US case and other developed nations that have put similar measures in place and accordingly fashion out a legislation that would cater for emerging trends in insurance market.

A stitch in time saves nine! National Flood Insurance Act NOW or NEVER!!
Credit: Cephas Egbefome
Assistant Research Officer
Office of Parliament,
Parliament House, Accra

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