ARC gets US Gov backing to expand parametric insurance capacity in Africa
African Risk Capacity Limited (ARC Ltd.), the financial affiliate and underwriting entity of the African Risk Capacity (ARC) Group, has entered into a landmark US $11.7 million partnership with the United States Government, to help expand access to parametric insurance and increase the size of its risk pool.
The goal is to further safeguard food security and strengthen climate resilience in Africa by increasing access to parametric insurance.
The partnership targets provision of parametric insurance to protect vulnerable smallholder farmers that are facing increasing climate change-related disasters, while at the same time helping African governments to better respond to climate risks.
The US Government funding is designed to allow ARC Ltd. to scale up technical assistance in-country and increase parametric insurance coverage across Africa, over the next three years.
ARC Ltd. COO Ange Chitate, who heads up the project, commented, “ARC Ltd. is committed to protecting the livelihoods of farmers and pastoralists across our African Union member states. Our priority with this grant is to provide coverage to 19 states, and with the support of the USG, we will refine and develop innovative products that will meet the evolving needs of these countries.”
“ARC Ltd. has set an ambitious goal of protecting the lives and livelihoods of 700 million vulnerable people in Africa by 2034,” added ARC Ltd. CEO Lesley Ndlovu. “The partnership with the United States Government, and others, will help us achieve this goal. It also demonstrates the commitment of developed nations to building the resilience of the global south to withstand climate disasters.”
There are two objectives from this project, the first being to scale-up capacity building through use of parametric insurance, to help countries better-manage the impacts of climate change-induced disasters.
ARC Ltd. will customise risk models for countries in Africa and establish their contingency plans, while integrating parametric insurance, to ensure insurance payouts are aligned with local areas and populations, while being integrated with policy frameworks.
The second goal is to increase the uptake of parametric insurance, by working with the African Union and regional economic communities to encourage adoption.
There will also be work to align parametric insurance with regional climate adaptation efforts, to broaden adoption further.
ARC Ltd. said that it is “committed to expanding its portfolio to cover more countries, hazards and people,” through the development of new micro and meso-insurance products to work alongside its sovereign parametric disaster insurance offering, while also targeting different groups of beneficiaries with them.
ARC will further refine its drought, flood and tropical cyclone risk models, and also work on capacity building to support an enlarged risk pool.
Reinsurance capital will be key to this goal, as ARC’s risk pool is backed by international reinsurance markets.
