African Risk Capacity Ltd. CEO Lesley Ndlovu on the 2024 TIME100 Climate List

JOHANNESBURG, 15 November 2024 – TIME has named African Risk Capacity Limited (ARC Ltd.) CEO Lesley Ndlovu on its 2024 TIME100 Climate List, recognising him as one of the 100 most influential climate leaders in business. Lesley was selected for his leadership of the innovative hybrid mutual insurer and financial affiliate of the ARC Group, which has been pioneering parametric insurance in Africa to build climate resilience. Over the past decade, amid escalating climate-driven disasters across Africa, ARC Ltd. has disbursed $230 million in claims payouts to member states and provided coverage to 50 million people. Under Ndlovu’s leadership, ARC Ltd. has expanded its network of members, donors and partners, increasing access to affordable insurance across the continent and extending protection to marginalised communities, such as refugees, for the first time. According to TIME, the selection process was influenced by the prominent 2024 theme of climate finance and a focus on candidates demonstrating measurable, scalable achievements and recent action. Ndlovu was recognised in the ‘Defenders’ category, highlighting his leadership in protecting vulnerable African communities from climate risks. His membership on the Board of Directors of the UN Principles for Sustainable Insurance and his involvement with the Glasgow Financial Alliance for Net Zero further reflects his commitment to sustainable practices and addressing climate change. Says Ndlovu: “It is an honour to be included in the prestigious TIME100 Climate list of changemakers. This recognition underscores the critical role of innovative financial solutions, like parametric insurance, in protecting lives and livelihoods from the escalating impacts of climate change. We remain committed to building climate resilience, and our goal is to expand coverage to all 55 African Union States by 2034.” See Lesley Ndlovu’s #TIME100Climate list profile here: https://time.com/7172504/lesley-ndlovu/ For the full list click here: https://time.com/time100-climate 

ARC Ltd. advocates for innovative disaster risk insurance solutions at COP29 to bolster Africa’s climate resilience

Hybrid mutual insurer African Risk Capacity (ARC) Limited is taking a leading role at COP29, advocating for innovative disaster risk insurance solutions to build climate resilience in Africa. This year’s “Finance COP,” taking place in Baku, Azerbaijan, from 11-22 November, is focused on improving and increasing the delivery of climate finance to developing countries, with negotiations centred around adopting a new climate finance target. ARC Ltd. will drive critical conversations by hosting panels at the CARICOM and Climate, Peace & Transboundary Resilience pavilions. These panels will showcase advancements in disaster risk financing and highlight how these solutions can support long-term climate adaptation strategies. ARC Ltd. also joins fellow Regional Risk Pools – the Caribbean Catastrophe Risk Insurance Facility Segregated Portfolio Company (CCRIF SPC), Pacific Catastrophe Risk Insurance Company (PCRIC), and Southeast Asia Disaster Risk Insurance Facility (SEADRIF) – at the CARICOM Pavilion 121 in the Blue Zone, to engage with global stakeholders to further address the impact of climate change on vulnerable communities. Strengthening financial and operational preparednessSouthern Africa is highly susceptible to a range of shocks, including climate-related disasters like floods and droughts, as well as pandemics, conflict, and social unrest, which increase fragility in the region. The World Bank Group Strategy for Fragility, Conflict and Violence (FCV) 2020–2025 recognises climate change as a significant driver of FCV and as a threat multiplier.This vulnerability is often compounded by a lack of financial preparedness. As a result, countries over-rely on reactive financing instruments and ad-hoc budget reallocations for disaster relief. This diverts crucial resources from health, education, and social protection, undermining development gains. The Regional Emergency Preparedness and Inclusive Recovery (REPAIR) Programme, a collaborative initiative launched in July 2024 by the World Bank, ARC Ltd., the Global Shield, and their partners, aims to address this challenge by strengthening participating countries’ financial and operational preparedness for such shocks. On 14 November, from 12:30 to 13:30, Senior Programme Manager Avinash Ramessur will lead ARC Ltd.’s panel discussion on “Strengthening Financial and Operational Preparedness Through Innovative Disaster Risk Financing Solutions” at the CARICOM Pavilion 121. The panel will explore the instruments and products developed to assist climate-vulnerable countries. The panellists are: Innovative insurance solutions for the most vulnerable in AfricaEscalating extreme weather events disrupt agricultural productivity, leading to failed crops and damaged harvests, increasing food insecurity and water scarcity. Additionally, a humanitarian crisis is unfolding with disasters forcing people to flee their homes to live in overcrowded refugee camps or urban slums with little access to basic public services. These vulnerable and marginalised communities are particularly susceptible to ongoing climate calamities. On 18 November, from 11:45 to 12:45, Underwriting Manager and Humanitarian Lead Gloria Womitso will moderate another ARC Ltd. session at the CARICOM Pavilion, exploring initiatives like the Replica Programme, which supports governments by enabling humanitarian organisations to replicate government disaster risk insurance policies, providing coverage for vulnerable communities. ARC Ltd. recently extended the programme to the UN Refugee Agency, and for the first time, refugees and displaced persons are also protected. Womitso will be joined by: Regional Risk Pools and loss and damage Risk pooling mechanisms offer a lifeline for at-risk countries, especially small island and coastal states, disproportionately impacted by loss and damage caused by climate change. These mechanisms allow governments to transfer risk and access rapid liquidity when disasters strike. While the Loss and Damage Fund aims to provide financial relief post-disaster, risk pools are based on a pre-arranged financing structure that enables rapid payouts to governments based on predetermined triggers, such as rainfall levels or drought conditions. This approach facilitates early intervention before communities are forced to resort to negative coping strategies, complementing the broader objectives of the Loss and Damage Fund. The Regional Risk Pools entity – comprising the Caribbean Catastrophe Risk Insurance Facility Segregated Portfolio Company (CCRIF SPC), the Pacific Catastrophe Risk Insurance Company (PCRIC), the Southeast Asia Disaster Risk Insurance Facility (SEADRIF), and ARC Ltd. – was formed to assist countries across several regions in this regard. On 13 November, from 12:00 to 13:30, ARC Ltd. CEO Lesley Ndlovu, CCRIF SPC CEO Isaac Anthony, PCRIC CEO Aholotu Palu, and SEADRIF Executive Director and Board Member Benedikt Signer will lead a discussion on how collaboration among the Regional Risk Pools, through sharing knowledge, experience, and resources for pre-arranged funding enhances climate resilience. The risk pools can significantly expand their reach by attracting more international investment, and the Global Shield Programme (GSP), a joint initiative of the G7 and V20, has come on board. It provides additional funding, enabling higher coverage limits and greater access for low-income nations. The Regional Risk Pool leaders will also join the Co-Director of the Global Shield Secretariat, Dr Astrid Zwick; Head of the Global Shield Solutions Platform, Annette Detken and Co-Head Karsten Löffler, on 16 November from 11:00 to 12:30, at the Climate, Peace & Transboundary Resilience Pavilion. They will discuss the implementation progress of the GSP for Regional Risk Pools, and its role it in strengthening the transboundary resilience of climate-vulnerable countries. The conversation will conclude with a signing ceremony signalling their commitment to a joint way forward. ARC Ltd. innovates online ARC Ltd. is launching its newly designed website at COP29, which reflects the company’s involvement in the disaster risk insurance industry and its impact on African countries. Following the company’s recent 10th anniversary, and as it continues to expand its reach across the continent, this refreshed online presence will better support member states and partners. The site creates a more intuitive space for collaboration and access to critical resources, reinforcing ARC Ltd.’s commitment to transparency, inclusivity, and accessibility, and making vital information and resources easier to find for a broader range of users. Key new features include dedicated partners and member state sections, highlighting ARC Ltd.’s extensive network of public and private sector players involved in climate resilience efforts across Africa. These sections also demonstrate how ARC Ltd. and its partners share expertise and resources to tackle climate challenges.  A brand-new “Impact” section showcases case studies and

Closing the insurance gap and continuous improvement are critical in addressing Africa’s increasing climate impacts, ARC Ltd. Members’ Retreat reveals

JOHANNESBURG, 18 September 2024 – With Africa facing increasing climate impacts, closing the disaster risk insurance gap has become more critical than ever, as revealed at the recent African Risk Capacity (ARC) Ltd.’s Members’ Retreat. Held at the Park Plaza Westminster Bridge Hotel in London, the event brought together ARC Ltd. staff, members, partners, and other stakeholders to discuss challenges and solutions.  Luis Alton, Senior Financial Sector Specialist at the World Bank’s Disaster Risk Financing and Insurance Program highlighted the inefficiencies in current resource allocation for mitigating climate shocks. “While many countries have multiple instruments to help them with this, they’re not joined up strategically, which can lead to inefficiencies,” he said. “For example, where insurance should be used for extreme events, it is used to cover less extreme events instead.”  The retreat also addressed the rising number of displaced persons due to climate events. In 2010, there were 44 million globally displaced persons worldwide, including those internally displaced, refugees, those who have crossed borders, and those looking for protection. In 2024, this number has spiked to 120 million people.   “Many of these refugees come from areas where there are other conflicts, like war and violence. They also live in climate disaster risk areas and will be further displaced as extreme weather events increase. So, the numbers are only going to rise. It’s clear that the models in place are not enough,” said UNHCR Climate Insurance Lead and Strategic Risk Advisor Mojisola Terry.   “We need to disrupt the way institutions respond to, utilise resources, and fund their climate interventions,” Terry added, explaining that it should no longer be a debate. “We want to demonstrate that investing in risk mitigation will lead to more resilient communities, better assistance, better targeting, and hopefully address the humanitarian landscape.”  Phil Stevens, International Finance Director at the UK Foreign Commonwealth and Development Office (FCDO), who also serves on the ARC Group Board, referred to key climate discussions, including those at COP29 this year, saying: “ARC Ltd. is going to be instrumental to these conversations, as well as the broader conversations we’re hearing around the Bridgetown 3.0 initiative and the call to action from President Biden, to name a few.”   The Bridgetown initiative calls for urgent action to reform the international financial architecture, while President Joe Biden has called on global leaders to catalyse climate action through the Major Economies Forum on Energy and Climate.  Increasing impact through innovation  The ARC Group’s innovative approach to climate resilience was highlighted by Group Governing Board Chairperson Dr Mothae Anthony Maruping. He explained that, in the 12 years of its existence, the group has expanded its products beyond drought to include outbreaks and epidemics, tropical cyclones and floods, and brought humanitarian donor partners on board. “We will keep challenging ourselves to come up with new and creative solutions by actively listening and engaging fully in new dialogues that will define our path,” he said.  Terry noted that climate resilience must be looked at holistically. “That’s why the partnership between the UNHCR and ARC Ltd. to increase protection to those who need it the most through the Replica programme is logical and timely,” she explained. The Replica programme extends ARC Ltd.’s parametric insurance to humanitarian organisations. Through the programme, humanitarian organisations can take out insurance on behalf of a country against climate-induced threats and disease outbreaks.  The UNHCR took out a modest Replica premium for drought insurance in the central region of Malawi for 2024. In April, the release of funds was triggered, resulting in a payout which assisted 20,000 people – 60% of Malawi’s refugee community.   “When it comes to implementing these resources, we always look at how we can reach out to the most vulnerable,” said Doshanie Kadokera, Malawi Government coordinator. Other partners and donors have also been inspired. “Humanity Insure has agreed to supplement the premium subsidy for Malawi for 2024/25,” Terry explained.   The UK, through FCDO, has been a donor partner of ARC Ltd. since its inception in 2014. This long-term commitment demonstrates FCDO’s support for the company’s work on the continent. “Since then, we have provided coverage to 130 million African people,” shared Stevens.  Continuous improvement for climate resilience  Terry pointed out that no perfect climate resilience model exists, only opportunities to improve. “The UNHCR is committed to continuing to work with ARC Ltd., as well as other partners, to make sure we have access to the best possible data so we can plan and prepare better in the event of disasters.”   Kadokera added that there is a need for ownership among governments when it comes to building climate resilience in African countries. “Malawi’s risk management strategies and policies with ARC Ltd. and partners like the UNHCR, reflect our commitment to protecting our citizens and their livelihoods.”  ARC Ltd. believes in looking internally to constantly improve. “Looking ahead, it’s clear that we still have a lot of work to do. Our focus remains on three priorities: expanding coverage to all 55 African Union countries, managing capital funding and reinsurance to maintain an A- credit rating, and strengthening its team and processes for greater efficiency,” explained CEO Lesley Ndlovu.   Unified action the key  The retreat was also an opportunity to celebrate ARC Ltd.’s 10th anniversary and reflect on its achievements while charting a forward-looking strategy for sustainable climate risk management across the continent. “It was truly moving to hear from so many of our partners and members who shared their experiences and congratulatory messages. These testimonials are a testament to our shared success,” said Ndlovu. Since its inception in 2014, ARC Ltd has paid out $229.8 million in claims, provided 1.2 billion insurance coverage and protected 30 million Africans per year.   ARC Ltd. Board Chair Dr Maxwell Mkwezalamba lauded ARC Ltd.’s pivotal role within the broader ARC ecosystem. “Over the past decade, ARC Ltd. has translated visionary goals into actionable financial solutions for member states, delivering critical insurance coverage that protects them from the devastating impact of climate disasters.”  Dr Maruping emphasised the importance of

ARC Ltd. Receives $27 million from the Dutch Government to help build Africa’s climate resilience

JOHANNESBURG, 19 June 2024 – ARC Ltd. has received a $27 million contribution from the Dutch government to boost climate resilience in Africa. The funding will be channelled through the African Development Bank’s Africa Disaster Risk Financing Programme (ADRiFi) Multi-Donor Trust Fund. The Netherlands becomes the sixth contributor to the Fund, and its contribution will support the promotion of parametric insurance and other climate risk management instruments in Africa.  Says ARC Ltd. Lesley Ndlovu: “We are grateful for the generosity of the Netherlands, and we welcome the country as a new donor to the ADRiFi programme to help reduce the protection gap and assist us in making parametric insurance more accessible and affordable through premium support.”  The ADRiFi partnership, a collaborative effort between the Bank and ARC, was established in 2019 to increase risk insurance coverage across Africa and improve the continent’s ability to respond to climate shocks. Since its inception, this partnership has made significant strides, providing financial protection to over six million individuals across the continent.  The programme’s success is built on the robust support from various international donors, including the United Kingdom, Switzerland, the United States, Canada, Norway and now the Netherlands. The Bank, in turn, has invested more than $100 million and supported 16 African countries to access sovereign insurance and financial protection against climate hazards.   Parametric insurance is a critical tool in the fight against climate change. Unlike traditional insurance, which relies on lengthy claims processes, parametric insurance triggers payouts based on pre-agreed parameters, such as the intensity of a cyclone or excess rainfall. This mechanism allows for rapid disbursement of funds, ensuring that affected communities receive timely assistance to recover and rebuild. The swift response facilitated by parametric insurance is essential for mitigating the socioeconomic impacts of natural disasters, particularly among the most vulnerable communities.  The ADRiFi programme continues to play a pivotal role in advancing the uptake of this innovative mechanism. At the same time, this collective effort underscores the global commitment to safeguard African nations from the escalating impacts of climate change. 

Rising climate death toll in Africa underscores urgency for COP28 action

JOHANNESBURG, 28 November 2023 – It’s been a year of climate carnage in Africa. At least 15 700 people have lost their lives to extreme weather disasters, according to the latest report from Carbon Brief, while another 34 million have been affected. From flooding to intense heatwaves and drought, these devastating statistics represent a human emergency on an unprecedented scale, which comes as the global community prepares for COP28.  Even more sobering is that the bulk of the fatalities were in Libya alone. More than 11 300 people died in September when Storm Daniel caused two dams to overflow in the coastal city of Derna. In the catastrophic flooding that followed, people and buildings were washed out to sea. Researchers believe climate change was to blame for increasing the probability and intensity of this extreme weather event by as much as 50%.  More than 20 other flood disasters occurred across the continent, affecting numerous countries. In early November, Kenya experienced torrential rains followed by flooding that forced 4 000 families to flee their homes. As many as 1 000 livestock died and 97 hectares of cropland were wiped out. In the aftermath of floods, communities face further challenges – the risk of waterborne diseases, food shortages, and the daunting task of rebuilding.  Tropical cyclones are also happening with alarming regularity, battering coastlines, flattening villages, and wiping out the economic lifelines of many communities. Tropical Cyclone Freddy, which began its path of destruction in February, persisted for 34 days. Impacting Madagascar, Mozambique, Mauritius, Malawi, Réunion, and Zimbabwe, it left at least 860 people dead, destroyed homes and cropland, and caused cholera outbreaks in its wake.  In contrast, the Horn of Africa has been gripped by persistent drought conditions, impacting more than 29 million people. The communities in the region are dependent on rain-fed agriculture and pastoralism, but the prolonged drought, said to be the worst in some 40 years, has turned arable land to dust, caused crop failure, water scarcity and decimated livestock herds. The ripple effect is huge – people are forced to leave their homes in search of pasture and water, resulting in mass population displacement. Malnutrition rates, especially among children, have soared and as many as 4 million people in the region are now acutely food insecure.    Scientists weigh in  A group of international scientists has concluded that human-induced climate change increased the severity of the drought in the southern part of the Horn of Africa, which includes southern Ethiopia, southern Somalia, and eastern Kenya. They say the likelihood of such droughts has increased 100-fold.  “State fragility and conflict, as well as the length of the drought played a significant role in worsening outcomes, especially for people in Somalia. Further, the severity of impacts linked to the long duration of the drought also raises serious questions about the length of droughts that government drought management systems and the international aid infrastructure should be prepared to handle in the future,” they point out.   This year has also seen heatwaves across Southern Africa and extreme heat in Northern Africa, especially Algeria, which led to deadly wildfires. While heatwaves are not officially categorised as disasters, their impact on populations is significant. Climate scientists explain that in addition to climate change, extreme events are also compounded by the El Niño weather phenomenon.   The Carbon Brief report points out another critical issue – the lack of weather stations in Africa, which makes it difficult to track and record extreme weather events, thereby contributing to underreporting. This is particularly true for heatwaves, which are often not recorded due to the absence of observable impacts like those seen with floods or cyclones. The lack of data and reporting on these events makes it challenging to prepare for and mitigate their impacts.   The scale of disasters  The combination of climate change, poverty, and action (or in-action) in Africa paints a complex picture. Natural disasters push vulnerable communities to the limits of their resilience, while poverty hampers their capacity to recover. At the same time, a lack of in-country emergency preparedness and climate adaptation strategies leaves many nations on the back foot. This is where innovation and strategic public-private partnerships can make a significant difference.   Recently, in Malawi, African Risk Capacity Ltd., a parametric insurer the financial affiliate of the ARC Group, launched an insurance innovation to help the government expand the World Bank’s Social Support for Resilient Livelihoods Project already underway in the country. “It incorporates a risk transfer instrument and a risk-layering approach that will enable Malawi to safeguard more vulnerable households from climate shocks and guarantee faster access to financing,” explains ARC Ltd. Head of Business Operations David Maslo. “This social protection insurance innovation has significant potential for replication across Africa, while encouraging other governments and global organisations to take a progressive, collaborative approach.”  Action for Africa  The devastating impact of several extreme weather events in one year in Africa serves as a grim reminder of the consequences of climate change. This continental crisis must catalyse a transformative climate agenda that prioritises the vulnerable, and COP28 presents an opportunity for actionable and results-oriented strategies to take centre stage. The time has come to move beyond vision and mission to actively shape a future where extreme weather does not dictate the fate of Africa.

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

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.