58 CASE STUDY: SENEGAL FIRST-EVER FLOOD RISK INSURANCE PRODUCT FOR AFRICA The human and economic toll is immense – according to the World Meteorological Association, over the last 50 years, more than 20 000 lives were lost, and millions of people were displaced. Rapid urbanisation, poor urban development and infrastructure, and overpopulation are among the factors contributing to the large-scale, deadly impact. While some ARC member states have national and regional early-warning systems in place for floods, often economic loss estimation is lacking to underpin a sovereign insurance scheme. Flood risk insurance is effective in that it empowers governments to anticipate floods, identify flood-prone districts and manage these events more effectively. Tailoring a flood risk product To address this hazard, ARC partnered with JBA Risk Management to create a customisable parametric flood insurance product. The resulting risk model is the first of its kind, providing daily impact analysis on potential economic losses and affected communities so governments can understand flood risk exposures and determine appropriate coverage. Payouts are calculated based on whether the impacts exceed predefined trigger thresholds. Extensive pilots in several countries followed to determine local historical data and patterns, enabling ARC Ltd. to customise each risk model. A global technical advisory committee of senior flood experts also assessed the product, deeming it fit for purpose and use in underwriting flood insurance policies. In early June 2023, ARC Group launched the first-ever flood risk product for Africa. The initial roll-out includes six countries – Madagascar, Mozambique, Malawi, Côte d’Ivoire, Ghana, and Togo. More countries will be onboarded in 2024. Floods are among Africa’s most devastating natural hazards with the greatest humanitarian impact. With climate change causing increased extreme rainfall, flooding has become more frequent and intense across the continent. CASE STUDY : SENEGAL ARC GROUP LAUNCHED THE FIRST-EVER FLOOD RISK PRODUCT FOR AFRICA IN JUNE 2023
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