African Risk Capacity aims to boost disaster cover to US$2 bln by 2020
Source: Middle East Insurance Review | Jul 2016
The African Risk Capacity (ARC) has inked separate deals with the African Development Bank (AfDB) and the Inter-African Conference on Insurance Markets (CIMA), representing major steps towards its goal of providing US$2 billion worth of annual climate disaster coverage to the region’s most vulnerable populations.
The AfDB and CIMA partnerships are also expected to help drive ARC, Africa’s first sovereign catastrophe insurance pool, towards its goal of indirectly insuring 150 million people across 30 countries on the continent by 2020.
The Letter of Intent between ARC and the AfDB marked an announcement of their intention to collaborate in the areas of planning, preparation and response to extreme weather events and natural disasters for the benefit of the Regional Member Countries of the AfDB (RMCs).
The collaboration is expected to play a pivotal role in protecting investments for economic growth especially in key economic areas vulnerable to weather shocks such as agriculture. The Letter of Intent will support the introduction and mainstreaming of disaster risk financing into national fiscal policy in Member States.
The MoU signed by ARC and CIMA, the regulatory and insurance body for 14 countries in West and Central Africa, reflects an agreement to cooperate on a number of areas including: training by CIMA of officials and technicians from ARC Member States on index-based insurance products for sovereign governments; establishing working groups to study and implement strategies related to weather-index based risk coverage; and promoting weather-index based insurance products for access to traditional insurers.
According to the ARC, seven countries (Niger, Senegal, The Gambia, Mali, Malawi, Mauritania and Kenya) have already purchased insurance from ARC Ltd, and it intends to launch a tropical cyclone insurance product this year and a flood insurance product in 2017 in a bid to increase insurance coverage across Africa.