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 were 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 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’.

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.

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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.

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.
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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 have a technical

unit that 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 could
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 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
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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!!

Name of Author: Cephas Egbefome

Assistant Research Officer

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Address: Office of Parliament,
Parliament House
Accra

Email: cegbefome@yahoo.com

Photograph of the Author