DAKAR, Senegal, 7 October 2021 -/African Media Agency(AMA)/- A global network of humanitarian agencies, including Catholic Relief Services, Save the Children, Action Against Hunger, Plan, Oxfam and World Vision, have signed a climate risk insurance policy that will protect up to 160,000 people in Senegal from the effects of drought. One of the first of its kind, the policy will enable aid agencies to offer life-saving support to people in Senegal as soon as a drought is predicted, helping to prevent famine.
The $1.5 million USD policy, signed by Start Network, a global network of more than 50 humanitarian agencies, and provided by African Risk Capacity, is built on ‘parametric’ insurance. This means it pays out before a crisis, based on pre-agreed scientific triggers, based for example on rainfall data. Unlike the current model, in which aid agencies receive funding only after a crisis has hit, it enables organisations to plan for and mitigate the worst effects of a drought.
A similar policy was signed for the 2019/2020 growing season and a 10.6m USD payout meant that more than 300,000 people were supported. In 2020 the payout enabled families to protect livestock and other valuable assets and avoid resorting to ‘negative coping strategies, such as skipping meals or sending children to work instead of school. The new policy announced today complements one purchased by the Government of Senegal, to ensure as many people as possible willbe protected, in total more than 500,000 people.
Christina Bennett, CEO of Start Network said: “We are delighted to work with African Risk Capacity again to offer this protection for the people of Senegal at risk during the next drought. Slow aid funding is one of the biggest structural problems in disaster response efforts, yet the majority of crises can be predicted. And with the effects of the climate emergency on the world’s most vulnerable, the need for a new approach is more urgent than ever. We urgegovernments ahead of COP26 to fund anticipatory humanitarian action that can intervene before risks turn into disasters, to save more lives ”
“We have consistently proven that parametric insurance coverage is a valuable tool for protecting the lives and livelihoods of vulnerable communities in the event of natural perils. We are excited that our collaboration with partners like Start Network is helping Senegal and other countries to access an expanded risk coverage beyond that purchased by themselves. As we aim to provide coverage to the entire region, we call on our development partners to support this model and facilitate the participation of other countries for a well-coordinated and timely response in the event of climate risk events,”said Lesley Ndlovu, CEO, African Risk Capacity.
Start Network will also purchase a similar policy for Zimbabwe later this year, in partnership with African Risk Capacity, the Government of Zimbabwe and the World Food Programme. The initiative in Senegal is funded by the German Federal Ministry for Economic Cooperation and Development (BMZ) through the German Development Bank, Kreditanstalt für Wiederaufbau (KfW).
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African Risk Capacity – www.africanriskcapacity.org
African Risk Capacity (ARC) Group consists of ARC Agency and ARC Insurance Company Limited (ARC Ltd). ARC Agency was established in 2012 as a Specialized Agency of the African Union to help the Member States improve their capacities to better plan, prepare and respond to weather -related disasters. ARC Ltd is a mutual insurance facility providing risk transfer services to the Member States through risk pooling and access to reinsurance markets. ARC was established on the principle that investing in preparedness and early warning through an innovative financing approach is highly cost -effective and can save upward of four dollars for every dollar invested ex-ante. With the support of the United Kingdom, Germany, Sweden, Switzerland, Canada, France, the European Union, the Rockefeller Foundation, and the United States, ARC assists the AU Member States in reducing the risk of loss and damage caused by extreme weather events affecting Africa’s populations by providing, through sovereign disaster risk insurance, targeted responses to natural disasters in a more timely, cost-effective, objective and transparent manner. ARC is now using its expertise to help tackle some of the other most significant threats faced by the continent, including floods and outbreaks & epidemics. Since 2014, 62 policies have been signed by the Member States for cumulative insurance coverage of US$719 million for the protection of 72 million vulnerable populations in participating countries.