The African Risk Capacity (ARC), a provider of parametric insurance products in Africa, has announced the official launch of a parametric insurance product against high-impact epidemic risks. Subscription to the insurance product was made possible through ICMIF member African Risk Capacity Limited (ARC Ltd), a hybrid mutual insurer and financial affiliate of the African Risk Capacity Group.
Senegal will be the first African country to join this new innovative financing mechanism and it is hoped that other African Union states will also take up this parametric insurance product.
The parametric insurance product will provide cover against high-impact epidemic risks and is designed to deliver a source of rapid funding to support efforts to contain high-impact infectious disease outbreaks. This will complement the work of the Africa Centres for Disease Control and Prevention (Africa CDC).
In 2015, African Ministers of Finance asked ARC to develop a product to meet countries’ rapid funding needs to contain high-impact infectious disease outbreaks and complement the efforts of the Africa Centres for Disease Control and Prevention (Africa CDC).
In 2022, the ARC Group and its partners finalised the development of the product, which will provide parametric insurance to African Union (AU) member states for three pathogens responsible for Ebola virus disease, Marburg virus disease, and meningitis.
“In our perspective of diversifying our product offering aimed at protecting the most vulnerable populations of our continent, we are today launching this new sovereign risk transfer mechanism through parametric insurance, which will allow our Member States to benefit, in addition to insurance against climate-related disasters, from coverage against epidemic risks,” said UN Assistant Secretary-General and ARC Group Director General, Ibrahima Cheikh Diong. “We are confident that these predictable funding tools coupled with operational plans will strengthen response capacities of our Member States while developing their expertise to tackle public health emergencies”.
Ginkgo Bioworks provided epidemiological expertise and epidemic risk estimation services; subscription to the insurance product was made through ARC Ltd; and Munich Re was chosen as the lead reinsurer for the insurance product due to its long-standing expertise in epidemic risks and parametric insurance solutions; the reinsurance broking service was performed by AON, and the insurance premium was subsidised by the Swiss Agency for Development and Cooperation (SDC).
About African Risk Capacity Limited
Founded in 2014, the African Risk Capacity Limited (ARC Ltd) is a hybrid mutual insurer and financial affiliate of the African Risk Capacity Group. The organisation provides parametric insurance services to AU Member States and farmer organisations, employing innovative financing mechanisms to pool disaster-related risk across Africa and transferring it to international risk markets. In so doing, it improves the continent’s response to climate-related disasters and contributes to resilience building and ultimately to food security. Efforts are ongoing to ensure the ARC product portfolio is reflective of the needs of Member States and provides progressive solutions to weather-related disasters.