The African Risk Capacity (ARC) and the African Development Bank (AfDB) are to collaborate to enhance Member states’ understanding of the need for and value of disaster insurance and ultimately to help expand and embed risk transfer within countries policy and development objectives.
The African Risk Capacity (ARC), Africa’s first sovereign catastrophe insurance pool that uses parametric triggers to provide coverage, continues to push to expand the reach of its risk transfer products into African Member states.
With a mission to utilise parametric risk transfer and risk pooling techniques to provide countries with coverage for drought and other weather events, ARC enjoys broad support across Africa and partnerships with organisations such as the African Development Bank (AfDB) help ARC engage regional stakeholders in education and discussions that help to encourage greater participation in the pool.
The larger the risk pool, and the more diverse, the better ARC’s access to sources of reinsurance capital. Working with establishment group’s such as the AfDB will assist ARC in gaining greater penetration and bringing more countries into the pool, as well as expanding education about its product range, which is growing to include parametric tropical cyclone and flood coverage as well.
ARC and the AfDB signed a Memorandum of Understanding (MOU) at ARC’s Fifth Conference of Parties (CoP5) held in Abidjan, Côte d’Ivoire yesterday 7th March 2017. The MoU will see the AfDB and the ARC Agency will working alongside each other in order to further increase their Member states’ ability to understand the value of risk transfer.
The ultimate goal is to embed ARC’s products within and alongside Member states’ policy and development objectives, focusing on recurrent disasters including drought, floods and tropical cyclones as well as on greater resilience and faster recovery after disasters.
Senior Vice-President of the African Development Bank Dr. Frannie Leautier, said; “In the context of this MOU, ARC and AFDB will partner to support Member States in key areas, which will lay the foundations for a robust approach at the national-level around disaster risk financing.”
Mr. Mohamed Béavogui, United Nations Assistant Secretary-General and the Director-General of ARC, added; “This partnership with AfDB will complement ARC as we will jointly train and prepare countries to better manage weather-related risk and mainstream insurance into their disaster management plans.”
ARC’s risk pool represents a truly diversifying opportunity for global reinsurance and ILS firms, with its renewal now eagerly awaited each year. To-date, the majority of the pool has been backed by the world’s largest reinsurance firms, although Nephila Capital has participated before via its Lloyd’s syndicate.
Working with the AfDB will assist ARC in broadening its reach, educating Member states’ and encouraging greater uptake of its parametric disaster insurance products, which will grow the risk pool and result in an increasing opportunity for reinsurance and ILS to support ARC’s expansion.
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