ARC Ltd and Floodbase Partner to Develop Parametric Flood Insurance Solutions for Africa
Brooklyn, New York, October, 19 – Today Floodbase announced a partnership with African Risk Capacity Limited (ARC Ltd.) to develop, distribute, and scale parametric flood insurance solutions across Africa. Flood risk in Africa is largely uninsured, resulting in economic fragility, agricultural instability, and community displacement. The sprawling nature of farmlands, along with the high-risk status of African countries, has made it difficult for insurers to structure adequate indemnity insurance. To help close this insurance gap, ARC Ltd and Floodbase will develop parametric flood microinsurance products that can be scaled across Africa to cover smallholder farmers against agricultural risk. Unlike indemnity insurance, these products can pay out within days or weeks when the magnitude of flooding exceeds a predetermined threshold. They will be designed with predetermined pricing and payout thresholds based on Floodbase’s 23 years of observed flood history. This approach enables a country-wide agricultural flood solution for at-risk farmholders to support the population from ARC’s African Member States to recover more quickly from flood catastrophes. “Since its inception in 2014, ARC has shown that the parametric insurance model works and is impactful. We’re excited to partner with Floodbase to complement our portfolio of innovative parametric solutions to support flood vulnerable communities across Africa, with the goal of helping them quickly rebuild and recover following damaging flood events” said David Maslo, Head of Business Development at ARC. ARC Ltd.’s region-specific specialization and distribution network, in combination with Floodbase’s unmatched flood data and expertise enables a significant step forward in mitigating the impact of flooding, insuring previously uninsurable flood risk, and fostering resilience across the African continent.
Charting Disaster Resilience: MOU Signals Sovereign Risk Pool’s Commitment
JOHANNESBURG, 17 October 2023 – A recent sovereign risk pools summit hosted by the Centre for Disaster Protection and Gallagher Re has resulted in a joint Memorandum of Understanding. Held on 5 October 2023, the summit facilitated strategic engagement for the CEOs of African Risk Capacity Limited (ARC Ltd, a financial affiliate of the ARC Group), the Pacific Catastrophe Risk Insurance Company (PCRIC), the Caribbean Catastrophe Risk Insurance Facility (CCRIF SPC) including Central America, and senior advisors for the Southeast Asia Disaster Risk Insurance Facility (SEADRIF). These organisations form the Sovereign Risk Pools, established to serve sovereign climate and disaster risk insurance objectives of nearly 100 nations globally. The summit also welcomed representatives of the World Bank Group, Hiscox, the UK’s Foreign, Commonwealth & Development Office (FCDO), the Sustainable Markets Initiative, the Insurance Development Forum, the Global Shield and the Global Shield Solutions Platform. They joined strategic discussions about disaster finance trends and gaps, and how the Sovereign Risk Pools can collaborate to scale-up the availability of pre-arranged disaster finance to serve public disaster response needs. The Sovereign Risk Pool executives have agreed to cooperate under the joint MoU as follows: “We are pleased that the pools also agreed to collaborate more extensively to develop parametric models and to further explore meso- micro and replica schemes to complement sovereign-level risk transfer,” says ARC Ltd. CEO Lesley Ndlovu. “This is our area of expertise, and where we can share knowledge and best practices.” The pools also confirmed a shared interest in exploring the establishment of a joint reinsurance facility to serve global risk transfer access to global capital markets, which is needed in addition to base capital required to enable expanded insurance offerings to countries.
Upscaling and risk-layering for climate resilience in Malawi
JOHANNESBURG, 18 September 2023 – African Risk Capacity (ARC) Ltd. has come on board to assist the Malawi Government with an insurance innovation that will scale up the World Bank’s Social Support for Resilient Livelihoods Project (SSRLP) in the country. This will see Malawi’s flagship safety net – the Social Cash Transfer Programme (SCTP) – reinforced with a risk transfer instrument to provide additional liquidity for the response to future droughts. It forms part of an upscaling and risk-layering approach to protect additional vulnerable households against climatic shocks and ensure earlier and rapid access to funding. The Malawi National Local Government Finance Committee has been implementing the World Bank’s SSRLP since June 2020 to improve resilience through strengthening the national platform for safety nets. The project aims to build human capital among poor and vulnerable populations through Social Cash Transfers (SCTs), livelihoods support (LS), Enhanced Climate Smart Public Works (CSEPWP), as well as an option for scalable financing for SCTs to reach more affected households followings weather-related disasters. Currently, the SCTP includes a mechanism to scale up the response to droughts in six districts in Malawi. The government’s long-term vision, however, is that of making it a national mechanism targeting all 28 districts, and one that responds to a wider range of climate risks and leverages more sources of financing, including donor funding. To this end, the government has made significant investments in the SCTP registration and payment systems, and institutional decision-making processes, to mitigate delays in reaching vulnerable households with cash support at the onset of a drought. The approach also harnesses a new insurance product specifically designed for the government to fund this scale-up, underwritten by the parametric insurer and financial affiliate of the ARC Group, ARC Ltd. It will be partly used to cover the costs of scaling up the SCTP in the 2023/24 and 2024/25 agricultural seasons, should rainfall deficits occur. This will be complemented by additional flexible contingency financing to act as a deductible to the insurance product. Funding support for this is provided by the World Bank and the Global Shield Financing Facility. Introducing a shock-responsive mechanism Poverty is pervasive in Malawi, with 75% of the population living below the international poverty line. The economy relies on agriculture, which accounts for more than a quarter of the GDP, and a significant percentage of the population relies on rain-fed smallholder agriculture. However, increasing natural disasters, such as cyclones, droughts, and floods, have resulted in destroyed or failed harvests and food insecurity. “In the event of a disaster, the immediate reaction among individuals is to engage in negative coping behaviours to survive, such as selling assets like their livestock. This results in increased poverty,” explains Scalable Component Co-ordinator at the Malawi National Local Government Finance Committee, Mulder Mkutumula. By connecting Malawi’s social protection system — the (SCTP) — to disaster risk financing instruments, the government has been able to introduce a shock-responsive mechanism that scales up the early cash-transfer response to additional vulnerable households when rainfall levels and food insecurity indicate drought conditions. “Providing the very poor households with resources before the impact of a drought is felt, helps prevent negative coping behaviours,” says Mkutumula. Pre-defined triggers and pre-identified vulnerable households allow the government to model the potential cost of the SCTP scale-up mechanism, develop a cost-effective financing plan, and pre-arrange financing instruments. The financing plan is combined with a contingency fund for small scale-ups and the risk transfer instrument for larger scale-ups. Combining these two instruments provides the government with the financial resources required for the scale up. “The World Bank sees Shock Responsive Social Protection mechanisms as key to ensuring that financial support quickly reaches vulnerable households after a shock. Demonstrating how this can work is a vital contribution to investments in human capital resilience, investments that are so necessary as shocks become more frequent and potentially harmful. With the support of the Global Shield – Financing Facility, the government has combined social protection delivery mechanisms with a financing plan, which the risk transfer policy is one part of. We expect to learn a lot from the mechanism being implemented in Malawi.” Practice Manager for Social Protection and Jobs for East Africa at the World Bank, Robert Chase Application in the field The SCTP scale-up mechanism was first implemented during the 2021/22 rainy season in the three districts of Blantyre, Ntcheu, and Thyolo. Around 74,000 households were made eligible for a cash transfer. A drought, followed by compounding shocks, resulted in an additional cash transfer for approximately 320,000 individuals totalling US$6.3 million, which the government withdrew from its contingency reserves. For the 2022/23 season, the mechanism was expanded to cover three additional districts, namely Chiradzulu, Karonga and Nkhotakota, and reached 500 000 people (about 100 000 households) in the six districts where it was implemented. Building on innovation with innovation “ARC Ltd. and the Government of Malawi designed the insurance product so that it is aligned with country’s existing triggers for the SCTP scale-up mechanism. This is a ground-breaking innovation for ARC,” says Head of Business Development David Maslo. He adds that the development of insurance products for social protection is growing in Africa, fuelled by a great need. “This new product is a step in the right direction towards managing the impact of climate change in Africa so that all those impacted will be assisted. It is a model to replicate throughout the continent.” Maslo points out that combining financial instruments and following a risk layering approach can help address the cost of the disaster response. “The structure of the policy is such that the Malawi Government retains some of the risk through their contingency fund. It also enables the triggering of the insurance product for more severe droughts and increases the overall coverage and value proposition. In this way, diverse financial instruments are used appropriately and optimised to enhance the disaster risk financing strategy of the government. “This is also complemented by the ARC Sovereign insurance policy, which covers some of the other response costs
ARC Ltd releases 2022 Annual Report
JOHANNESBURG, 11 September 2023 – A record total payout of US$60 million in 2022 is among the highlights detailed in ARC Ltd.’s integrated annual report, together with significant strides in innovation to safeguard African nations from the increasing risks associated with climate change. The payout was the largest since the company’s inception in 2014, underpinning the value of the company’s work as Africa’s first sovereign parametric development insurer. In 2022, ARC Ltd. covered 18 million people in countries prone to drought and tropical cyclones. Since 2014, the company has paid out US$125 million across eight risk pools, making a significant difference to the lives and livelihoods of at-risk communities. Chairman of the ARC Ltd. Board, Dr Abdoulie Janneh points out that this accomplishment was made possible due to a network of support: “Our donors and partners stood with us as we sought to protect the most vulnerable from climate change impacts in Africa. No one person or organisation can make the impact alone, and we are heartened that behind ARC Ltd. is a powerful and dedicated group of stakeholders, who are fully committed to our success. Together, we faced unprecedented challenges, but also achieved significant milestones.” These milestones include Comoros and Somalia joining the pool as ARC Ltd. focuses on expanding its member states, thereby covering more people. It has set the ambitious target of covering 200 million people annually by 2025 and positioning itself as the continent’s leading institution for disaster risk financing. Innovation and product diversification are central to this and 2022 saw the launch of two new products: flood risk, and outbreaks and epidemics (O&E). Malawi and Togo piloted flood risk, while Uganda piloted O&E, with Senegal becoming the first member state to sign up for the O&E policy. Despite an increasingly difficult environment, ARC Ltd. also made strides in expanding its non-sovereign and micro/meso insurance portfolio. Explains ARC Ltd. CEO Lesley Ndlovu: “The global macroeconomic environment experienced a weakening trend, leading to diminished financial capabilities of our member states. This reduced their ability to afford insurance premiums, as national priorities, such as healthcare and education, competed for limited resources. The effect of these challenges was evident in 2022.” Ndlovu says it is only with the assistance of donors and partners that disaster risk insurance can be made more accessible. In 2022, ARC Ltd. was supported by the Swiss Agency for Development and Cooperation (SDC) for the launch of the Outbreaks and Epidemics product through capital and premium contributions. A leader in ESG In terms of company successes, the annual report highlights ARC Ltd. receiving the global insurance industry’s top environmental, social and governance (ESG) score, following an evaluation by ESG research, ratings and data company, Sustainalytics. ARC Ltd. moved from low risk to negligible risk, improving by two positions, and at 5.7, its ESG risk rating is the lowest among its global peers. ARC Ltd. also leads in the Diversified Insurance sector, with the lowest exposure among its peers (24.0) and the strongest management score (80.3). It also scored negligible risk ratings for data privacy and security, corporate governance, human capital, business ethics and ESG integration. Looking ahead at goals for 2023, Ndlovu says ARC Ltd. remains focused on new products and tailoring solutions for individual countries to meet their needs. The company also wants to expand its Replica programme by partnering with more humanitarian organisations and launching the programme in additional countries. “The urgency for disaster risk insurance has never been greater, given the escalating frequency and intensity of perils, but with the support of our stakeholders and the collective efforts of our exceptional team, we are poised to continue making meaningful strides in the fight against climate change,” concludes Ndlovu. To view ARC Ltd.’s 2023 integrated annual report go to https://bit.ly/467RiFg
Fitch upgrades ARC Ltd.’s Outlook to Stable with an IFS Rating of ‘A-‘
JOHANNESBURG, 13 July 2023 – Fitch Ratings has upgraded African Risk Capacity (ARC) Limited’s outlook to stable with an Insurer Financial Strength (IFS) rating of ‘A-‘ and a Long-Term Issuer Default Rating (IDR) of ‘BBB+’. The credit rating agency notes the upgrade is due to ARC Ltd.’s “strong progress in terms of meeting its development objectives, demonstrated by enhanced claim payouts to affected African sovereigns, product diversification and improving the reach of its development activities. Strong progress in product diversification initiatives and the improving franchise have also led to a higher company profile score of ‘bbb’.” Fitch has referred to the commitment and credit quality of ARC’s sponsors. The company enjoys the support and sponsorship of the German development bank KfW through the Federal Ministry for Economic Cooperation and Development (BMZ), and the UK Foreign, Commonwealth and Development Office (FCDO). This is in the form of capital contributions, governance oversight and premium subsidisation. ARC Ltd.’s specialisation as a parametric insurance provider and its strong track record in claims payouts have boosted its company profile. The introduction last year of an outbreaks and epidemics product followed by a flood risk product this year have strengthened and diversified its portfolio. “ARC’s operating scale remains small, with reported gross written premiums of USD23 million in 2022, a drop from USD31 million 2021 due to the non-renewal of some contracts during the year. However, premiums so far in 2023 have strongly recovered and Fitch expects the company’s growing reach and diversification initiatives to support growth in the medium-term,” the rating agency stated. Fitch deems ARC Ltd.’s capital position as another key driver for the upgrade. “We regard the end-2022 USD68 million returnable capital provided by KfW/BMZ and the FCDO as fully loss-absorbing, and consequently treat it as equity capital when assessing capitalisation and leverage. On this basis, ARC scored ‘Extremely Strong’ on Fitch’s Prism Factor-Based Capital Model (FBM) based on end-2022 figures, unchanged from 2021.” The rating agency says it expects that ARC Ltd. could garner further capital support as it continues to achieve its development goals. Meanwhile its regulatory capitalisation remains strong, with a Bermuda enhanced capital requirement (ECR) ratio of 387% at end-2022 (2021: 796%). Comments Lesley Ndlovu, ARC Ltd. CEO: “We welcome the Fitch upgrade and see it as a reflection of our efforts to protect African nations from the increasing impact of climate change. It is also an acknowledgement of our drive to diversify our portfolio – we now cover the four major perils of drought, flood, tropical cyclone, and outbreaks and epidemics. Going forward, we will continue with our mission of signing up at least 35 African countries and covering more than 200 million people annually by 2025.”
The ARC Group announces a USD 2.5 million insurance payout to the Togolese Republic’s recovery from drought
JOHANNESBURG, 3 May 2023 – As the West and Central Africa region counts the cost of the recurring drought events that have swept through parts of the region, particularly during the 2022 agricultural season, the African Risk Capacity (ARC) Group recently made an insurance payout of USD 2.5 million to the Government of the Togolese Republic to honour the conditions of the sovereign insurance policy taken out by the country to cover this risk. In line with its mandate to work with African Union Member States to help them to better plan, prepare and respond to climate-induced threats and disease outbreaks, ARC has been working with Togo since 2017 to strengthen its response capacities to drought events. The Togolese Republic first participated in ARC risk pools for drought during the 2019/2020 agricultural season. Togo’s participation in the 2022/2023 ARC risk pool enabled the country to transfer its risk onto international markets via ARC Limited (Ltd), a mutual insurer owned by the African Member States and the commercial affiliate of the ARC Group. ARC Ltd has been providing risk pooling services to African Union (AU) member states since 2014, and this payout makes another strong case for the role of parametric insurance in building a country’s resilience to climate-induced threats. “It’s been a great honour to work with the Togolese Republic on its journey to build the country’s resilience to the threats paused by drought events. This payout will reach the most vulnerable, and is a confirmation of the need for countries to proactively manage their risks in the face of growing climate threats”, said Lesley Ndlovu, CEO of ARC Ltd. Togo’s insurance policy in this ARC risk pool was made possible by an insurance premium paid in part by the government, with premium support contribution from the Africa Disaster Risk Financing Programme, a framework developed as a collaboration between the African Development Bank and the ARC Group, funded by the Agence Française de Développement (ADRiFi AFD). Togo’s 2022/23 agricultural season was marked by pockets of intermittent dry spells in the north, particularly during the sowing window. The dry spells that lasted longer than 10 days caused a reduction in yield and agricultural production at the end of the season. According to the AfricaRisk View, ARC’s technical tool for monitoring the season, 689,267 people were affected in the prefectures of Savannes, Kara, and Central. To implement planned payout activities, the Government of the Togolese Republic will be guided by a pre-agreed Final Implementation Plan developed as part of the ARC contingency planning process that is facilitated by ARC Agency, which is responsible for working with member states to ensure their preparedness to manage such disaster events. Funds received will be used to implement a mobile money cash transfer response where 9,920 households will receive USD $71.4 every month for three months to help them cope with the impact of the drought. Not only will this cash transfer contribute to food security for beneficiary households but it will also prevent them from resorting to negative coping mechanisms such as selling off productive assets. To reach beneficiaries efficiently, the government will be supported by various stakeholder groups, including the National Agency for Civil Protection (NACP), the Agricultural Statistics, Information and Documentation Directorate (DSID), the Ministry of Agriculture, Livestock and Fishery Production (MAPAH), None-Governmental Organisations, Civil Society Organisations, and the local government. “The ARC mechanism is designed to support AU member states in their fight against climate-induced threats and disease outbreaks and to provide country-specific solutions based on needs. We are happy that Togo is taking action to protect vulnerable populations. We look forward to a continued relationship with Togo as we intensify efforts to strengthen response capacities and preparedness.” said Ibrahima Cheikh Diong, UN Assistant Secretary General and ARC Group Director General ARC’s unique value proposition enables it to provide innovative financial mechanisms to pool the risk of participating African countries and transfer it to international reinsurance markets to strengthen members’ Disaster Risk Management (DRM) systems.
The ARC Group announces an insurance payout to the Republic of The Gambian towards recovery from drought
JOHANNESBURG, 20 April 2023 – The Government of the Republic of The Gambia recently received an insurance payout of USD 187 641 following its participation in the African Risk Capacity (ARC) Group mechanism, designed to help African Union (AU) member states plan, prepare and to better respond to extreme weather events. The funds come at a time when the country is facing severe food insecurity and will support recovery efforts from the recent drought event and help the government reach the most affected populations. The payout, made by ARC Limited (ARC Ltd.), the insurance affiliate of the ARC Group responsible for risk pooling and transfer, is the result of a failed 2022/2023 agricultural season. The payment was made to the government in fulfilment of the conditions of the drought sovereign insurance policy taken out by The Gambia to cover this risk. Insurance taken out with ARC Ltd avails predictable finance to facilitate response to a disaster event of an agreed attachment point by a participating country. The Gambia’s participation in this ARC risk pool was made possible by an insurance premium paid in part by the government, with premium support contribution from the Africa Disaster Risk Financing Programme, a framework developed as a collaboration between the African Development Bank and the ARC Group, funded by the Agence Française de Développement (ADRiFi AFD). As drought conditions spread across West Africa’s Sahel region, The Gambia was amongst the most affected during the 2022/23 agricultural season. This led to late planting in the districts of Badibou, Jarra West, Kiang North Bank West, and Upper River North. According to the AfricaRisk View, ARC’s technical software for early warning and monitoring, a total of 153,902 people were affected, triggering a payout of USD 187,641. “We are thrilled to be making this payout to the Government of the Republic of the Gambia and look forward to seeing the difference it will make in the lives of affected communities. ARC has been working closely with the country’s Disaster Risk Management structures to strengthen its response capacities to drought, and this payout is the culmination of these efforts,” said Lesley Ndlovu, CEO of ARC Ltd. “The payout will go a long way towards facilitating timely response on the ground, especially given the existing contingency plans to guide the implementation response.” Through the Replica programme, a strategy which allows humanitarian actors to take out a policy on behalf of a country, Replica partner, the World Food Programme, which took out a policy on behalf of The Gambia, also received a payout of the same amount. This payout will also be used to implement recovery activities in the country and complement other efforts. The Final Implementation Plan, developed from ARC’s contingency planning process, will guide the use of the payout, and assist 17,058 people in the affected regions. The Republic of Gambia has chosen the use of a cash transfer to be managed through the National Disaster Authority (NDMA) to reach the most vulnerable. WFP will use the disbursement received in the same manner. In addition to abating increased food insecurity, the payout will also help prevent households from resorting to negative coping mechanisms such as selling off productive assets. Commenting on the payout, UN Assistant Secretary-General and ARC Group Director General, Ibrahima Cheikh Diong, reiterated the value of the ARC intervention, “The impact of disaster events goes beyond the immediate socio-economic costs and can reverse development gains that Africa has made. In the absence of instruments such as ARC, disaster events worsen food insecurity and can easily trap vulnerable populations into perpetual cycles of poverty.” He continued, “The effort from the Republic of The Gambia to build the country’s resilience is commendable. The government has continually demonstrated its willingness to fight the scourge of climate change towards protecting the lives and livelihoods of its people.” The ARC facility combines four critical elements of Disaster risk management: early warning, contingency planning, risk pooling and risk transfer to create a powerful value proposition and has proven to be an effective tool to improve a government’s preparedness to manage disaster events. Combined, this offering provides participating member states with access to immediate funds for early and planned responses to support vulnerable populations while strengthening response capacities.
African Risk Capacity Group and Djibouti Government sign first multi-year, multi-peril agreement in Africa to protect most climate-vulnerable communities
JOHANNESBURG, 17 MARCH 2023 – The Government of Djibouti has signed the first-ever multi-year, multi-peril agreement on the African continent with the African Risk Capacity Group (ARC Group) to protect the lives and livelihoods of its most climate-vulnerable communities. The ground-breaking agreement means that the country in the Horn of Africa now has access to five years of disaster risk management capacity building and disaster risk insurance coverage offered by the ARC Group, covering two of its most prevalent hazards – drought and excess precipitation. ARC Agency, a specialised agency of the African Union, assists African governments to better prepare, plan, and respond to natural disasters, which have increased in frequency and severity due to climate change. ARC Ltd., as its insurance affiliate, provides disaster risk financing mechanisms, such as risk pooling and risk transfer services, to help countries build resilience and recover faster after a disaster. Says Ibrahima Cheikh Diong, UN-Assistant Secretary General and Director General of the African Risk Capacity Group: “The Government of Djibouti has demonstrated yet again its leadership role in the region in the domain of disaster risk management by reinforcing its planning, preparation and response capacities against natural disasters. We at ARC are extremely proud to stand by Djibouti as we continue to provide demand-driven technical support and holistic solutions to the country and other member states to ensure that they are well-equipped to protect their most vulnerable populations against climate shocks.” The World Bank and the Global Risk Financing Facility multi-donor fund have provided US$2 million to underwrite the insurance policy. Says Boubacar-Sid Barry, World Bank Resident Representative in Djibouti: “This is a first for Djibouti and underscores the World Bank’s commitment to support efforts that help communities to become more resilient and to adapt to climate change through the use of innovative financial instruments, including insurance.” Descartes Underwriting partnered with ARC in the past, bringing its expert technical and modelling capabilities, and understanding of risk to ARC’s work on the continent, which led to its involvement in Djibouti. The company utilises advanced data and machine-learning techniques to model underlying phenomena and unlock risk insights that better align with the realities of a shifting climate and risk landscape. Says Tanguy Touffut, CEO of Descartes Underwriting: “We were elated to contribute our scientific expertise to support a more precise understanding and modelling of the risks in Djibouti, and then to design and support the risk transfer of this customised multi-peril cover. We sent an underwriter to Djibouti as part of our commitment to the project, and to the productive collaboration between ourselves, ARC, the World Bank and the Government of Djibouti.” Alessandro Girelli and Charlotte Rougier, both underwriting managers at Descartes, explain that Djibouti is an arid country with no significant, permanent, surface-water source, and the goal of the insurance cover for drought was to cover the pastoral population, who are the most vulnerable to drought. Mainly nomadic herders, living in rural areas, they move according to the rainfall and the availability of fodder. “We custom-designed the index to align with both the rainfall seasons and migration patterns of the pastoral population. The index is also based on soil-moisture deficit and the policy covers the entire country,” Rougier says. While Djibouti has very low annual precipitation levels, it is also affected by extreme (high intensity over a short period) precipitation events that can cause devastating flash floods, with significant human and economic losses. “The focus of the excess precipitation part of the insurance coverage is on Djibouti-City, which comprises approximately 60% of the population. People living here are particularly vulnerable to extreme rainfall due to population density, the topography of the city and its coastal location,” explains Girelli. “Descartes is proud to have been involved in this pioneering work, and grateful to Generali Global Corporate & Commercial, which was also part of supporting this achievement. Our role is to revolutionise insurance in the face of climate change and provide cover to those most vulnerable to its impact. This is a space where we want to continue contributing.” While Djibouti was an original signatory of ARC’s treaty in 2012, according to Executive Secretary for Risks and Disasters Ahmed Mohamed Madar, this agreement now signals the government’s intensified efforts to mitigate the human and financial costs of natural disasters, simultaneously expressing confidence in its ARC membership. Says ARC Ltd. CEO Lesley Ndlovu: “Not only is this multi-year, multi-peril agreement ground-breaking in Africa, but it’s also the first time we are covering excess precipitation. Being able to build two unique, innovative risk products for Djibouti and being ready to launch in record time has set a precedent that we hope to replicate throughout Africa going forward.” He is quick to stress, however, that despite the fast turnaround, there is no compromise on delivering services such as contingency planning, the details of which are currently being finalised with the Djibouti government. “Our concomitant services remain critical, as always,” Ndlovu says. The signing of the agreement comes as the De-Risking, Inclusion and Value Enhancement of Pastoral Economies Project (DRIVE) is being launched to protect pastoralists against the effects of climate change in the Horn of Africa (https://projects.worldbank.org/en/projects-operations/project-detail/P176517). The financing of Djibouti’s multi-year, multi-peril policy is part of the DRIVE programme.
African Risk Capacity Limited and Milliman launch postgraduate scholarship programme for African students studying climate change risk
JOHANNESBURG, 16 MARCH 2023 – Africa’s premier institution for disaster risk financing on and for the African continent, African Risk Capacity Limited and Milliman, a risk management, benefits and technology company, have come together to launch a postgraduate Africa Scholarship Programme exclusively for African students. Aimed at studies relating to mitigating the impact of climate change on African economies, the programme will offer four scholarships to qualifying applicants, covering up to three years of full-time postgraduate study at select universities on the continent. The Africa Scholarship Program seeks to assist students who cannot afford postgraduate studies while promoting actuarial and related professions and gender equality. As such, female students are strongly encouraged to apply. Milliman will provide the funding, while ARC Ltd. has already leveraged its relationships in Africa to make the programme a reality and will oversee it going forward. Additionally, the Africa Scholarship Programme ties in with the critical work that ARC Ltd. does in Africa, where it has been providing disaster risk insurance to its member states since 2014, and Milliman’s social responsibility objectives, with the latter serving the full spectrum of business, financial, government, union, education, and non-profit organisations. Additionally, Milliman helps mitigate risk in vulnerable countries through their actuarial strengths and modelling frameworks. Says Christal Morris, Milliman Chief Sustainability and DEI Officer: “We also seek to diversify talent and change the landscape and the demographics of the actuarial industry – this aligns well with the scholarship programme in Africa. Our desire to bring more gender parity to the profession has always been prominent, and by being part of the programme, we can aid in bridging that gap to access and educational resources. “Our collaboration with ARC Ltd. presents an excellent opportunity to make a differential investment in demographic groups that don’t typically get this kind of attention. The programme has created the ability for both of our organisations to contribute in impactful ways.” With the synergy between the two organisations evident, it is CEO of ARC Ltd., Lesley Ndlovu, who is the architect of the Africa Scholarship Programme, as he himself was once given a helping hand. Ndlovu explains: “My passion for scholarships providing opportunities for students stems from my own experience as a student at the University of Oxford. I was a beneficiary of a scholarship which was the foundation of my career. Working with Milliman to set up our own scholarship programme is my way of contributing to expanding access to opportunities for the next generation.” Students will be able to apply to the following universities: They may choose from the following postgraduate degrees: With applications now open, students are encouraged to put themselves forward for this life-changing opportunity. A prerequisite, however, is that they must commit to working in an African country for two years after graduation. “We desire to see these graduates succeed, and therefore ARC Ltd. and Milliman will also be providing internships to give them a strong foundation in their chosen careers and an immersion in the challenges of risk management,” Ndlovu concludes. Details of the scholarship and the application form are available on https://africanscholarship.org/.
Madagascar has contingencies to aid its swift recovery from devastating impacts of tropical cyclones
JOHANNESBURG, 27 FEBRUARY 2023 – The unusually protracted journey cyclone Freddy led across the Indian Ocean this past month was a stark reminder of the vulnerability African nations like Madagascar grapple with, in the face of hazards such as tropical cyclones that could worsen with climate change. As the world watched Freddy travel a vast distance across the South Indian Ocean from the northwest coast of Australia to island nations thousands of miles away, Madagascar braced itself for another battering – just over a year after cyclone Batsirai wreaked havoc, one of four storms that hit the island nation that year. Moving across Madagascar last week, cyclone Freddy brought with it a storm surge of between one to two metres and 175km per hour winds, according to KinetiCast™, an online platform providing global insights on tropical cyclone hazards and impacts. KinetiCast™ is run by Kinetic Analysis Corporation, which created the tropical cyclone model for Africa’s premier institution for disaster risk financing on and for the African continent, African Risk Capacity Limited. The real-time-data it produces powers ARC Ltd.’s Tropical Cyclone Explorer and led to a pay out of US$10.7m to Madagascar last year to help the country recover from the effects of cyclone Batsirai. Kinetic Analysis Corporation’s CEO, Richard Murnane, explains: “We use data generated by official agencies such as the Joint Typhoon Warning Centre and Meteo France La Réunion, among others, to generate a geospatial footprint of the hazards associated with a tropical cyclone – winds, waves, storm surge and rainfall – as well as its impact and damage in terms of populations affected and purchasing power parity losses.” “In the case of cyclone Freddy, almost two million people in Madagascar were subjected to hurricane-strength winds and over 20,000 were in areas subject to storm surge,” Murnane adds. Due to its geographical position, Madagascar has borne the brunt of the south-west Indian Ocean cyclone season which runs from November to April. Last year, it brought several storms to the African island nation’s shores including the devastating cyclone Batsirai, tropical storm Ana, tropical storm Dumako and tropical storm Emnati. Besides the loss of life, these storms bring flooding, wind damage, destruction to property and infrastructure, and landslides. Villages and towns are cut off, people displaced, schools destroyed, and access to clean drinking water, electricity and supplies severely hampered. In the case of Batsirai, some 121 people were killed and 75,000 displaced. However, Madagascar is covered within ARC Ltd.’s parametric insurance risk-pooling facility – the first African country to have signed up for sovereign parametric cyclone insurance protection since the organisation launched its cyclone product in the second half of 2020. The country took out a policy, fully co-financed by KfW Development Bank and ADRiFi Multi-Donor Trust Fund. “Based on ARC Ltd.’s tropical cyclone model, we identified that more than six million people were exposed to cyclone Batsirai. Shortly after the cyclone, ARC Ltd. made a pay out of US$10.7m to enable the country to start rebuilding,” says Lesley Ndlovu, CEO ARC Ltd. “Our parametric insurance triggers ensure rapid deployment so that assistance can reach those who need it most and lives can be saved. Unlike traditional insurance policies, intended to return the insured back into the position they were in prior to an insured event, parametric insurance covers the probability of a predefined event happening instead of indemnifying actual loss incurred.” Without parametric insurance, vulnerable nations such as Madagascar would be unable to respond swiftly and effectively, to help build back better. ARC Ltd. already has 35 African Union members that have access to its ARC Ltd. risk transfer services. There are ongoing efforts to ensure that more countries sign up to support this mechanism and endorse it as Africa’s solution to the growing threats of natural disasters.