climate catastrophe bond

The physical climate risk protection gap, so the gulf between climate related losses covered by insurance, reinsurance or risk transfer and those going uncovered, is widening, but instruments such as insurance-linked securities (ILS), catastrophe bonds and other blended financing solutions can help to narrow this gap.

A forum co-chaired by UK regulator the Financial Conduct Authority (FCA) and the Bank of England’s Prudential Regulation Authority (PRA) calls for the development of a market for climate-related insurance-linked securities (ILS) in London.

The European Commission (EC) has launched a consultation on sustainable finance, as it plans to “ensure a sustainable and resilient economic recovery following the coronavirus outbreak.”

The African Risk Capacity (ARC) continues to work towards the implementation of its climate catastrophe bond backed Extreme Climate Facility (XCF), focusing on the development of a robust multi-hazard index that can be used to trigger the instruments.

The African Risk Capacity (ARC) is continuing to make progress towards the launch of its Extreme Climate Facility (XCF), a proposed multi-year funding mechanism that will issue climate change catastrophe bonds to help African nations transfer climate change related exposure to the capital markets.

The African Risk Capacity (ARC) has enlarged its risk pool, adding five new countries to those protected by the parametric insurer, growing the risk pool to $192m of capacity and utilising $70m of global reinsurance cover, which includes some ILS or collateralised protection.

The latest in our series of interviews features Dr Simon Young, CEO of African Risk Capacity Insurance Company Ltd (ARC Ltd), a catastrophe risk pooling insurer for African states established under the umbrella of the African Risk Capacity (ARC) Specialised Agency of the African Union (AU).

The African Risk Capacity’s (ARC) pioneering catastrophe insurance pool, which operates as the ARC Insurance Company Ltd. (ARC Ltd), is set to make its first payout, totalling $25 million to three participating countries.

Catastrophe bonds as a tool for financing the risk of climate change is set to become reality as the African Risk Capacity (ARC) announces the launch of the Extreme Climate Facility (XCF), a multi-year funding mechanism that will issue climate change cat bonds.