LATEST: ARC to cover Zimbabwe on climate risk insurance

26 Nov, 2021 - 10:11 0 Views
LATEST: ARC to cover Zimbabwe on climate risk insurance

The Chronicle

Enacy Mapakame in Victoria Falls

ZIMBABWEANS are expected to further benefit from disaster risk financing programmes by the African Risk Capacity (ARC) Group, which is targeting to increase coverage to about 200 million people across the region in the next five years.

This comes as the severity and frequency of natural disasters is on the increase due to climate change, which is exposing people to food insecurity, supply chain disruptions across value chains as well as affecting trade in the region at a time the African Continental Free Trade Area (AfCFTA) is now at implementation stage.

Disaster preparedness, mitigation and reducing its impacts have been a major challenge in the region but that is expected to change, thanks to the ARC Group, made up of ARC Agency and ARC Insurance Company Limited, a mutual insurance firm providing risk transfer services to member states through risk pooling and access to reinsurance markets.

ARC Limited chief executive officer, Mr Lesley Ndlovu, said climate induced disasters were on the rise in the region and creating scope for more programmes aimed at increasing cover against such problems.

In the past decade, the Sadc region battled El-Nino drought, for instance, which affected food production while in 2019 tropical cyclone Idai left a trail of destruction in Zimbabwe.

Mr Ndlovu said increasing risk insurance to more people could be achieved as more countries sign up for cover. Currently, the group has 35 AU member states, providing insurance for droughts and tropical cyclones.

Since 2014, 62 policies have been signed by the member states for cumulative insurance coverage of US$720 million to protect 72 million vulnerable populations in participating countries.

“In the next five years, we are looking at increasing cover across the continent to at least 200 million people as we also cover the insurance gap.

“We will work with local insurance companies to expand cover so that Africans may be protected from climate risks,” he said during an interview on the sidelines of the ARC retreat held in the resort town of Victoria Falls.

Stakeholders congregated in the resort town to discuss issues around disaster risk management, and among the delegates were Government representatives, donor community and members of the insurance sector gathered to map the way forward in reducing climate induced risk.

The ACR Group was formed in 2012 as an initiative of the African Union to help member States improve their capacities to better plan, prepare and respond to weather-related disasters.

It was formed on the principle that investing in preparedness and early warning through an innovative financing approach is highly cost-effective.

The standard approach to pay for climate disasters is considered slow and unpredictable, using humanitarian appeals or loans arranged after a disaster strikes.

But according to ARC, the group now replaces these outdated approaches by offering governments and humanitarian actors the opportunity to plan and purchase insurance that can provide fast payouts, quickly reaching people who need support.

This prevents humanitarian needs from escalating, ultimately saving lives, protecting livelihoods and assets, and safeguarding development gains.

Zimbabwe has already benefited from its membership to the ARC Group after taking up an insurance policy with the organization. In 2019/20, the country received a payout of US$1,7 million from the group which helped over 180 000 families in vulnerable districts of the country.

“Zimbabwe is vulnerable to the effects of climate change especially when it comes to drought because in this country, we have a high frequency of droughts. Insurance is a solution which then provides the financial means for the agriculture sector of Zimbabwe to bounce back after the effects of a drought or weather-related disasters.

“Parametric insurance is crucial as it pays out claims early allowing economic activity to commence without much severe disruption” said Ndlovu.

During the recently held COP26 in Scotland, Germany announced an €18 million premium support to subsidize climate insurance for African Risk Capacity (ARC) Member States to assist in reducing the risk of loss and damage caused by extreme weather events affecting Africa’s populations.

Share This: