Africa News - African risk pool to double CAT coverage
Source: Middle East Insurance Review | Jan 2016
The African Union’s African Risk Capacity (ARC), Africa’s first sovereign catastrophe insurance pool, has announced a plan to double its insurance coverage through a new replica coverage initiative. The initiative will allow international organisations, such as United Nations (UN) Agencies, and non-governmental organisations (NGOs) to take out policies that match those already provided directly to African governments, expanding each country’s coverage.
In 2015, the drought in the Sahel triggered US$26 million in payouts by ARC’s financial affiliate, ARC Ltd, to Mauritania, Niger and Senegal, which paid a combined premium of $8 million. Payouts were used to deliver livestock fodder, food and cash to affected populations based on pre-approved contingency plans.
By 2020, ARC Ltd, which received returnable “development capital” contributions from the UK government through DFID and the German government through KfW on behalf of BMZ, aims to increase direct sovereign coverage from $180 million in 2015 to $850 million by 2020 as more countries join and its offering expands from drought to include floods and tropical cyclones. Replica coverage could double this limit to over $1.5 billion by 2020, insuring up to 30 countries, representing more than 150 million Africans, the ARC said.
ARC is also a key player in the “Anticipate, Absorb, Reshape” (A2R) initiative, a UN-led, multi-stakeholder initiative that seeks to accelerate action on the ground to enhance climate resilience of the most vulnerable by 2020.