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Cape Town - African Risk Capacity (ARC) Insurance Company will pay $25m in drought insurance claims to three countries in the Sahel this month.
The Sahel is the ecoclimatic and biogeographic zone of transition in Africa between the Sahara Desert to the north and the Sudanian Savanna to the south, according to Wikipedia.
Mauritania, Niger and Senegal, which paid a combined premium of $8m, will use the payout to mobilise early interventions in response to drought, based on pre-approved contingency plans.
The catastrophe insurance model was developed specifically for unique African climate issues by the ARC, a specialised agency of the African union, and its affiliated mutual insurance company, ARC.
The inaugural pool was set up in 2014 to help Member States build resilience to extreme weather events and protect food insecure populations.
Coverage for tropical cyclones and floods will be available in 2016.
"This African-owned approach is addressing specific country-level climate change concerns, decreasing reliance on external aid, and promoting a sustainable solution to one of our continent’s biggest challenges." said Dr Ngozi Okonjo-Iweala, Nigeria’s minister of Finance and chair of ARC’s governing board.
By purchasing parametric drought insurance policies last year, Kenya, Mauritania, Niger and Senegal became the first African countries to embrace this new model of innovative funding, taking a major step in transforming the disaster response paradigm on the continent
Robert Piper, the UN regional humanitarian co-ordinator for the Sahel, acknowledged the payment. "These first payouts by ARC represent a milestone in government leadership and financial innovation for emergency response across the Sahel. ARC’s information and action is spearheading what will be a substantial global emergency response over the coming months to mitigate what could otherwise become a major food security crisis."
“Senegal is proud to have been one of the pioneering members of the African Risk Capacity. The value of ARC is now beyond valid,” said Amadou Ba, minister of Economy and Finance for Senegal.
Payouts are made based on calculations using ARC’s in-house drought monitoring and loss calculation software, Africa RiskView.
ARC and its member states work in partnership to develop country-level contingency plans based on existing and scalable government programs. Prior to pay-outs being made, governments must submit a final implementation plan, which is certified by the ARC governing board’s peer review mechanism.
Dr Richard Wilcox, founding director general of ARC Agency, noted: “This is a transformative moment in African food security, demonstrating the potential for cost effective disaster financing.”
ARC has the potential to transform disaster risk management on the continent. With the ability to scale to a multi-billion dollar portfolio, ARC could offer coverage to 20 plus countries by 2020.
ARC received its initial capital from the German Development Bank and the United Kingdom’s Department for International Development.
Additional partners include the International Fund for Agricultural Development, Rockefeller Foundation, Swiss Agency for Development and Cooperation, Swedish International Development Cooperation, and the World Food Programme.
The Sahel is the ecoclimatic and biogeographic zone of transition in Africa between the Sahara Desert to the north and the Sudanian Savanna to the south, according to Wikipedia.
Mauritania, Niger and Senegal, which paid a combined premium of $8m, will use the payout to mobilise early interventions in response to drought, based on pre-approved contingency plans.
The catastrophe insurance model was developed specifically for unique African climate issues by the ARC, a specialised agency of the African union, and its affiliated mutual insurance company, ARC.
The inaugural pool was set up in 2014 to help Member States build resilience to extreme weather events and protect food insecure populations.
Coverage for tropical cyclones and floods will be available in 2016.
"This African-owned approach is addressing specific country-level climate change concerns, decreasing reliance on external aid, and promoting a sustainable solution to one of our continent’s biggest challenges." said Dr Ngozi Okonjo-Iweala, Nigeria’s minister of Finance and chair of ARC’s governing board.
By purchasing parametric drought insurance policies last year, Kenya, Mauritania, Niger and Senegal became the first African countries to embrace this new model of innovative funding, taking a major step in transforming the disaster response paradigm on the continent
Robert Piper, the UN regional humanitarian co-ordinator for the Sahel, acknowledged the payment. "These first payouts by ARC represent a milestone in government leadership and financial innovation for emergency response across the Sahel. ARC’s information and action is spearheading what will be a substantial global emergency response over the coming months to mitigate what could otherwise become a major food security crisis."
“Senegal is proud to have been one of the pioneering members of the African Risk Capacity. The value of ARC is now beyond valid,” said Amadou Ba, minister of Economy and Finance for Senegal.
Payouts are made based on calculations using ARC’s in-house drought monitoring and loss calculation software, Africa RiskView.
ARC and its member states work in partnership to develop country-level contingency plans based on existing and scalable government programs. Prior to pay-outs being made, governments must submit a final implementation plan, which is certified by the ARC governing board’s peer review mechanism.
Dr Richard Wilcox, founding director general of ARC Agency, noted: “This is a transformative moment in African food security, demonstrating the potential for cost effective disaster financing.”
ARC has the potential to transform disaster risk management on the continent. With the ability to scale to a multi-billion dollar portfolio, ARC could offer coverage to 20 plus countries by 2020.
ARC received its initial capital from the German Development Bank and the United Kingdom’s Department for International Development.
Additional partners include the International Fund for Agricultural Development, Rockefeller Foundation, Swiss Agency for Development and Cooperation, Swedish International Development Cooperation, and the World Food Programme.
