The African Risk Capacity (ARC) has now made a payout of $745,000 to the Government of Côte d’Ivoire after a deficit of rainfall during the growing season triggered the countries parametric insurance policy.
ARC had been aiming to pay the country $738,835, but the final payment came out slightly higher at closer to $745,000 at current currency rates.
The payout comes on the heels of one made to Senegal, which received $23 million after a full-blown drought triggered its parametric insurance policy.
ARC’s parametric risk model Africa RiskView detected that irregular and insufficient rainfall in the central region of Côte d’Ivoire will affect the food security of an estimated 400,000 people by the end of the growing season.
In-line with the contingency plan put in place as part of joining the ARC facility, Côte d’Ivoire will distribute the payout through its established Cash Transfer Programme, benefiting up to 32,496 persons corresponding to 6,500 households.
ARC aims to deliver resilience and reduce vulnerability to climate risks of its members, achieving this through the provision of parametric disaster insurance products (backed by reinsurance) that are delivered alongside developmental plans that aim to boost resilience.
By pooling the resulting risks, ARC can then access the global reinsurance markets for capacity to support its portfolio, passing on reinsurance efficiencies to the participating African countries.
Adama Coulibaly, the Honourable Minister for Economy and Finance of Côte d’Ivoire, commented, “The Government of Cote d’Ivoire takes the food security of its populations very seriously. Therefore, His Excellency, President Alassane Ouattara supports the collaboration with African Risk Capacity to ensure we can provide timely assistance to our vulnerable population and strengthen their capacity to cope with this kind of disaster.”
Côte d’Ivoire joined the parametric risk pool in 2019, purchasing rainfall deficit coverage across its Central and Northern regions.
“Providing Member States with the innovative tools to respond to natural disaster risks in a more timely and predictable manner gratifies our efforts,” explained UN-ASG Mohamed Beavogui, the Director-General of ARC Agency. “We are grateful to the Government of Cote d’Ivoire, and especially the Minister of Economy and Finance, for the confidence in our mechanism which has brought hope to the vulnerable population affected by the drought.”
Dolika Banda, the CEO of ARC Insurance Limited, also said, “Often, when natural disasters of this nature occur, the lives and livelihoods of women and, especially female-headed households are disproportionately impacted. We are happy that the details of the FIP for the payout adequately reflect our mutual concern for gender.”
Since 2014, 37 ARC parametric insurance policies have been purchased from the facility, resulting in US $74 million of premiums paid for a cumulative insurance limit of US $544 million and thought to protect 54 million vulnerable population in participating countries.
Payouts made are rising as this growing season proves volatile due to drought and a lack of rainfall in many regions of Africa, demonstrating the vital and quick paying source of risk capital it offers to African countries, helped by efficient reinsurance backing.