- Far-reaching coverage: Countries including Malawi will now be covered by Bermuda-based ARC
A ground-breaking Bermuda-based African catastrophe insurance pool has been praised by the leaders of the G7 group of industrialised nations.
The news came as the African Risk Capacity (ARC) pool is set to add five more nations, bringing the total to nine.
Chairman of the ARC Ltd board of directors and former CEO of the International Finance Corporation, Dr Lars Thunell said: “For ARC to be held up by G7 leaders as the model for disaster risk management in developing countries is testament to its winning formula.
“ARC has broken new ground in combining science, political ownership and risk pooling to address catastrophes and food insecurity, and showcases the benefits of African Government-led initiatives to build resilience to climate risk.”
This year, ARC is expanding its catastrophe insurance pool with Burkina Faso, Malawi, Mali, The Gambia and Zimbabwe expected to join the pool for 2015/16 growing seasons.
In its first year, the pool insured Niger, Senegal, Mauritania and Kenya for $129 million in total losses, reinsuring $55 million in the international markets.
With the additional five countries expected to join, the total coverage is set to rise to $192 million this year, with over $70 million reinsured.
ARC Ltd CEO Dr Simon Young said: “The ongoing programme of awareness and capacity building being implemented across Africa by ARC Agency, together with the success of ARC Ltd in its first year, have encouraged more countries to join the pool which has in turn increased the diversification benefits of the risk pooling, providing a win-win for all stakeholders.”
The G7 group, which includes the UK, US, Canada and Japan among its members, pledged at a meeting last month to insure up to 400 million more people in developing countries against climate change risk by 2020.
Dr Richard Wilcox, who led the team that established ARC, said: “If the G7 translate their commitment into real action we can achieve the target.
“In Africa, the capacities, technology and national demand are in place to reach $1 billion in coverage by 2020.
“If the G7 initiative brings the traditionally-funded international actors, like the UN humanitarian emergency system, into the risk management framework, we can readily double that coverage to $2 billion by 2020.”
ARC target is to sign up between 20 and 30 African countries over the next four years.
It wants to offer tropical cyclone and flood risk cover within the next year and in the longer term to set up a platform to issue climate change catastrophe bonds.
ARC has also got a mandate to look into insuring African countries against outbreaks of infectious disease, like the killer Ebola virus.
Global insurance reinsurance broker Willis Group Holdings, which has an office in Bermuda, won an insurance industry transaction of the year award for its work in setting up ARC Ltd on the Island, the second award in connection with the fund.
Bermuda beat of competition from Switzerland to become the home of the fund, set up by African Risk Capacity, a specialised agency created by the African Union to help member states better weather extreme climate conditions.
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