ENERGY
Africa’s energy systems, spanning national grids, rural electrification projects, and renewable power, are increasingly threatened by climate and natural hazards. Cyclones, floods, and droughts can damage generation facilities, transmission lines, and off-grid installations. Disruption to energy supply impacts healthcare delivery, water pumping, food refrigeration, and economic activity.
How ARC Ltd’s Parametric Risk Transfer Works
ARC Ltd is currently exploring targeted solutions for the energy sector, while its existing mechanisms already offer pathways to protect critical energy services:
- Integration into sovereign policies – Governments can earmark part of payouts for repairing energy infrastructure essential to service continuity.
- Bundled sectoral protection – Index covers for agriculture, WASH, or urban resilience can indirectly protect energy-dependent systems like irrigation or cold storage.
- Potential for dedicated products – ARC could develop hazard-specific energy covers, triggered by cyclone wind speed, flood depth, or prolonged drought affecting hydropower.
Concrete Use Cases
CCRIF SPC – Regional Precedent
In the Caribbean, the Caribbean Catastrophe Risk Insurance Facility (CCRIF) has provided parametric insurance for infrastructure repair after storms and earthquakes. Several countries used payouts to quickly restore roads, ports, and utilities. ARC Ltd could explore similar models tailored for Africa’s climate risk profile and infrastructure needs.