Bangladesh is set to roll out its first-ever flood protection insurance scheme within the next six months, targeting four flood-prone districts along the Jamuna River, officials familiar with the development told the FE on Wednesday.
The scheme will initially cover parts of Jamalpur, Sirajganj, Gaibandha and Kurigram -- areas frequently affected by monsoon floods, which have intensified due to climate change.
More than 100,000 households -- worst hit by recurring floods -- will be brought under the insurance coverage, which will be implemented by the Financial Institutions Division (FID) under the Ministry of Finance.
"We are currently in the process of designing the insurance products. Once that is complete, we will begin selling them," said a key official involved in the project.
He said that the insurance scheme is expected to be launched by February or March next year, ahead of the monsoon season.
Climate change has made floods increasingly unpredictable, causing severe damage to agriculture, homes and livelihoods across many parts of Bangladesh, especially to households along the banks of the Jamuna River.
The objective of the initiative is to shield vulnerable communities from the financial impacts of floods by developing tailored financial protection solutions, according to project officials.
However, they noted that designing an insurance product suited to the needs of these communities remains a significant challenge, given the lack of prior experience with similar schemes in Bangladesh.
Previously, Bangladesh introduced weather index-based crop insurance, primarily focused on losses caused by extreme heat, drought, and floods. Similarly, the new flood insurance scheme will be parametric in nature.
Parametric insurance provides payouts based on predefined triggers such as a specific level of rainfall or river height, rather than requiring on-site assessments of actual damage. This approach enables faster and more efficient compensation.
Under a community protection model, the government will contribute a portion of the funding to the scheme.
According to sources, affected individuals will receive compensation through mobile financial services (MFS) such as bKash, ensuring quick disbursement and helping communities recover more rapidly.
The government has undertaken the project at a cost of Tk 955.63 million, with the majority of the funding provided by the World Bank. The government will bear approximately one-third of the total cost.
The initiative is part of the Jamuna River Sustainable Management Project-1, specifically under its Disaster Risk Financing component (Component-3).
The Insurance Development and Regulatory Authority (IDRA) will oversee the programme, while the state-owned non-life insurer, Sadharan Bima Corporation (SBC), will act as the reinsurer.
The project officially commenced in October 2024 and is scheduled to continue until June 2028.
Severe floods in Bangladesh can last for extended periods, devastating lives and livelihoods and deepening poverty in affected areas.
According to the latest poverty map by the Bangladesh Bureau of Statistics (BBS), Kurigram suffers from very high poverty levels, Gaibandha has high poverty, Jamalpur has moderate poverty, and Sirajganj has relatively lower poverty rates.
The growing unpredictability of extreme weather events, driven by climate change, is worsening the crisis. Heavier rainfall, combined with melting Himalayan glaciers, is contributing to prolonged and unprecedented flooding. For people living in these vulnerable regions, waiting for floodwaters to recede is no longer an option as immediate financial support is essential for their survival.
jasimharoon@yahoo.com