The floods that swept through Accra on Monday, submerging warehouses, destroying vehicles, and forcing residents from their homes in the dead of night, have renewed urgent questions about financial preparedness and disaster risk in Ghana. For Solomon Lartey, President of the Africa Sureties and Insurance Advisory Company (ASIAC) and the Chartered Insurance Institute of Ghana (CIG), the devastation is as much an indictment of the country’s insurance culture as it is of its drainage infrastructure.
“This is a terrible time for insurance companies, but also the time when insurance will really, really come through,” Lartey said in an interview with The High Street Journal, even as he described having to move his own car at 2 am to prevent it from being swallowed by rising floodwaters. His personal experience underscores a grim irony: even an industry leader is not spared the flood’s reach, yet the very product designed to cushion such losses remains largely unwanted by the Ghanaian public.
A Familiar Pattern
Lartey drew parallels to the catastrophic June 3, 2015 disaster, when a fuel station explosion and simultaneous flooding near Circle killed over 150 people, as evidence that the insurance industry has both the capacity and the institutional will to settle legitimate claims at scale. His company alone disbursed more than $4.2 million to a single claimant in the aftermath of that event. “Almost every insurance company paid,” he said, positioning the industry’s track record as a rebuttal to the widespread scepticism that keeps penetration rates low.
But while the industry performed then, the question this week is whether the people and businesses hardest hit by the current floods ever gave it the chance to perform for them. Lartey’s assessment is blunt: most did not.
The Coverage Gap
Ghana’s insurance penetration remains among the lowest in sub-Saharan Africa, and flood disasters tend to expose this gap in the most unforgiving way. Lartey distinguishes between two categories of victims: those holding adequate policies, whose claims will be settled without dispute, and those who either bought no insurance at all or purchased stripped-down covers that exclude flood as a named peril.
The latter group faces a technical but consequential trap. Standard fire insurance policies in Ghana typically cover “fire and allied perils,” but flood coverage is not automatically bundled in. Policyholders who did not explicitly request flood inclusion, or who did not read their policy schedules carefully enough to notice its absence, may find themselves ineligible for payouts despite holding what they believed to be comprehensive cover. “If you have insurance and there’s no flood cover, then you will not be covered for flood,” Lartey said plainly.
He reserved particular criticism for the tendency among Ghanaian-owned businesses to negotiate aggressively for the lowest possible premiums, resulting in policies with coverage gaps that only become apparent at the claims stage. Foreign-incorporated companies operating in Ghana, he noted, typically insure adequately and at full value, meaning their claims will be large, verifiable, and settled. Their Ghanaian counterparts, he warned, will often find themselves in litigation.
Parametric Insurance: An Underutilised Tool
One of the more striking disclosures in Lartey’s remarks was his reference to parametric insurance, a product already available in the Ghanaian market but almost entirely unused. Unlike indemnity-based policies that require loss assessments and documentation, parametric insurance pays out automatically once a pre-agreed trigger is met, such as rainfall exceeding a defined threshold in a given location. No site visit. No adjustment process. No protracted claims negotiation.
“As soon as it has rained today and the amount of rainfall is beyond what is normally expected, the parametric insurance cover automatically kicks in, and they pay out,” Lartey explained. The existence of such a product, one that removes the friction points that most deter Ghanaians from engaging with insurers, and its near-total absence from household and business risk management portfolios, speaks to a deeper structural failure in how insurance is marketed, distributed, and understood in the country.
The Industry’s Own Reckoning
The floods, Lartey suggested, will compel insurance companies themselves to reassess their underwriting practices. In developed insurance markets, geographic exclusions are routine; flood-prone zones, hurricane corridors, and coastal areas are often either uninsurable or priced at prohibitive premiums to reflect actuarial risk. In Ghana, the competitive drive for premium income has led many insurers to extend cover to locations where the risk profile is manifestly unsustainable.
That, Lartey argued, must change. “As soon as there’s a two-millimetre downpour, there’s flooding. So those places, they should exclude them from their policies.” The corollary, however, is that underwriting exclusions without state intervention in land use enforcement create a protection vacuum. If insurers withdraw from high-risk zones while the government continues to permit construction in watercourses and floodplains, communities in those areas are left entirely exposed.
This is where Lartey’s position on mandatory insurance becomes nuanced. He supports the principle of compulsory household and property insurance in the abstract, but insists it cannot substitute for zoning enforcement. Insurance, in his framing, is not a mechanism for underwriting illegality. “If somebody is building in a waterway, it is the job of the state to make sure that they don’t build in the waterway,” he said. Compulsory insurance without complementary land-use governance would simply shift the cost of regulatory failure onto insurers, and ultimately onto premium-paying policyholders.
A Cultural and Economic Problem
The ASIAC president also identifies a cultural disposition, rooted partly in fatalism and partly in the prioritisation of immediate consumption over risk management, as the central obstacle. His example is pointed: a Ghanaian who spends $160,000 on a luxury vehicle but declines to pay $5,000 to $7,000 in comprehensive motor insurance is not making an uninformed decision. He is making a deliberate, if deeply irrational, one.
“The education is there,” Lartey said. “What is left is for people to decide.” And yet the floods of this season have done what years of industry campaigns could not: provide visceral, inescapable evidence of what uninsured risk looks like. The critical issue is whether that evidence translates into behaviour change, or whether, as has happened before, public memory fades before the next policy renewal date.
