CASE STUDY: REPLICA PROGRAMME IN ZIMBABWE

The ARC Replica initiative, which began in mid-2017, increased the engagement of the World Food Programme (WFP) and ARC Ltd, giving WFP the much-needed collaboration of working together.   Collaborative opportunities   The drought modelling software that is used to underpin ARC’s drought risk insurance policies was born out of WFP’s Vulnerability, Analysis and Mapping Unit. The software has made it possible for ARC to undertake accurate and reliable drought mapping initiatives.   Dual relationship   WFP shares a harmonious dual relationship with ARC Ltd: as an underwriter for the ARC Replica insurance policies and as a collaborating partner in the ARC Replica programme design and improvement. Some key results of the relationship include the following:   • As Replica partners, we take pride in being regarded as equals with ARC’s original clients, the sovereign governments, and the constructive sharing of feedback makes our relationship even stronger;   • Quick turnaround times, leading to improvements in policy wording after WFP’s legal team review, in some countries;  • Adjustments in the duration of data series for pricing and in the quality of the index. Using the revised data series, ARC Ltd adjusted the risk profile for Mali and Burkina Faso offering them an optimised product;   • Improvements to timeliness of issuing policies have been noted. This, however, requires the combined efforts of different stakeholders and has the potential to lead to more policies being signed and eventual timely settlement of premiums.  Opportunities for improvement   Improvements can be made in the following areas:   • Basis risk events – ARC Ltd should explicitly state its policy on basis risks events, highlighting that it would not pay for such events. Having made commercial payments in the past has created some expectations and these need to be handled well;   • Rules on Risk Transfer Parameters – lessons can be drawn out of West Africa and Zimbabwe and attending to the following would enhance the relationship with the insured   • Lessons out of West Africa – in West Africa, the rules were shared only after the ARV profiles had been customised, leading to dissatisfaction among some sovereigns on the performance of the product and at this stage there was no room to make changes;   • Lessons from Zimbabwe – the Zimbabwe case was better handled as the risk transfer parameters were communicated before work on the ARV customisation began. This approach should be encouraged as it lays out the expectations.  Written by WFP: Emily Jones, Climate Risk Financing Programme Policy Officer 

CASE STUDY: SENEGALESE GOVERNMENT

Replica programme in Senegal supports Ndouff village with food and cash transfers Senegal purchased drought coverage for the season 2018/2019. The total premiums paid amounted to $5.7 million: the government paid $3.1 million whereas the Replica partner paid $2.6 million. By payment of the premiums, more than 500,000 vulnerable people were insured.   Upon experiencing drought conditions Senegal qualified for a total payout of $23.1 million which was paid on time. The payouts went towards food, cash transfers and nutritional supplements for children under five years old.   Impact   The interventions had multiple impacts on the population and contributed towards the attainment of the SDGs:   The fruitful and groundbreaking partnership between Start Network and ARC Ltd began in 2018 when Start Network was invited to be part of the ARC Ltd programme as a Replica partner, with the role of replicating insurance policies taken by local governments. Start Network is made up of more than 50 aid agencies across five continents, ranging from large international organisations to national NGOs. Since becoming a Replica partner, alongside the World Food Programme, Start Network has played a key role in this programme, specifically in Senegal, where an insurance product and programme was offered by ARC Ltd to Start Network and the Senegalese government.   Through the programme, Start Network has strengthened the relationship between civil society and the sovereign state, building a symbiotic working relationship that grows our joint knowledge and capacity of risk management and macro insurance. The programme has also protected hundreds of thousands of families against the negative impacts of drought year on year.    In 2019, Start Network purchased complementary insurance policies in Senegal that released a total of $23.1 million payout that enables Start Network NGO members and the local government to jointly deliver early and proactive lifesaving assistance to Senegalese families in advance of a predicted severe drought.   The impacts of the 2020 lean season were then felt even more strongly by the most vulnerable communities in Senegal due to the detrimental impacts of the Covid-19 pandemic, but thanks to the assistance distributed ahead of the most critical time, the detrimental effects were mitigated.   Throughout the payout process, the implementation phase, and the closeout and reporting thereof, the co-operation between Start Network and ARC Ltd has been productive. The protocols agreed in advance between all three parties (ARC Ltd, Start Network and the Senegalese government) were respected and adhered to, ultimately enabling timely and rapid disbursements of funds and humanitarian actions.   A comprehensive programme evaluation is currently ongoing, and results on the efficacy of this process and best practices from Senegal will be shared to be replicated in other ARC countries in years to come. Start Network hopes to remain a key partner of ARC Ltd and sovereign states in the Replica programme as it grows and expands.   “As we grow the evidence base for early humanitarian action, we hope to build a strong culture of innovative and effective climate risk management in African countries.”  Replica Programme in Senegal: Start Network – Anna Farina, Risk Financing, Operational Lead