INFRASTRUCTURE
Infrastructure systems – such as roads, bridges, power lines, and energy grids – are the backbone of development. Yet they are increasingly at risk due to climate-induced disasters like floods, cyclones, landslides, and droughts. These events can damage or destroy vital infrastructure, disrupt energy supply, limit access to markets, and hinder emergency responses. For many African countries, repairing damaged infrastructure can take months or years, setting back economic and social progress.
How ARC Ltd’s Parametric Risk Transfer Works
ARC Ltd existing sovereign and inclusive insurance tools offer several pathways for protection and resilience:
- Rapid liquidity for infrastructure recovery: Governments with ARC sovereign insurance may choose to allocate part of the payout to repairing or restoring damaged infrastructure, particularly roads or rural electrification that support food distribution or service delivery.
- Trigger-based planning: Using Africa RiskView, it’s possible to simulate how infrastructure is likely to be impacted by weather shocks (e.g. flooding or extreme winds) and estimate the associated recovery needs.
- Energy-adjacent support via agriculture and water systems: Inclusive solutions and potential bundled covers (e.g. for irrigation or solar-powered systems) can indirectly protect energy infrastructure critical to smallholder operations.
- Scope for future development: ARC Ltd’s regional modelling expertise and climate analytics could be expanded to create index-based flood or cyclone covers for infrastructure-heavy sectors, especially in urban and coastal settings.
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.