75 Most importantly, he notes that the two ARC entities (African Risk Capacity Group and ARC Ltd.) must continue to grow together to deliver the full potential of their mechanism – effective insurance paired with strengthened disaster risk management systems within African countries. “This can help ensure the trust of ARC Ltd.’s main stakeholders in the future,” Marek says. Following on the success of 2023, Wilson says the FCDO will continue to support ARC Ltd. to take this innovative climate risk insurance even further to a sectoral level, such as education. “The FCDO recognises the value of regional risk pools to provide cost-effective insurance to some of the most climate-vulnerable countries. ARC Ltd. has demonstrated the ability to operate in Fragile and Conflict-Affected States, which experience multiple challenges, including climate change,” says Wilson. “We look forward to the continued growth of the ARC Ltd. risk pool to include new countries and new partners to provide greater climate risk coverage across Africa.” ARC Ltd.’s commitment to diversification has proven to be a force multiplier for Africa’s climate resilience. By building strong partnerships, the company has secured crucial financial resources to create a greater impact. This collaborative approach has also yielded impressive results for it and its partners – from streamlining premium subsidies to developing innovative products. With the KfW and FCDO’s continued support, ARC Ltd. is poised to further expand its reach and offer more African nations the financial security and technical support they need to weather the storms ahead. Overcoming climate challenges with cooperation Marek says ARC Ltd. is an important partner in disaster risk finance for their organisation. “In the past, we have seen problems with countries budgeting funds for premium payments. Premium subsidies were provided by development partners, but overly stringent criteria led to a slow uptake. Consequently, in 2023, the criteria were adapted to speed up implementation and increase the number of partner countries that can use these premiums,” he explains. “The excellent cooperation between ARC Ltd. management and staff with KfW staff has remained constant and helped overcome challenges like these,” Marek notes. “The practical revision of premium subsidy criteria has led to an improved uptake of subsidies and, as a result, an increased coverage of vulnerable people in African countries.” This change and Germany’s premium subsidies have positively contributed to ARC Ltd.’s record year in 2023. “Further funds have been made available by the German Ministry for Economic Development and Cooperation, which shows Germany’s ongoing support for ARC Ltd.,” Marek adds. The UK Government Actuaries Department (GAD), with FCDO funding, has provided support and technical assistance to ARC Ltd. in a number of areas to improve efficiency. The Somalia multi-year policy, funded by FCDO via the Africa Disaster Risk Financing Programme (ADRiFi) Multi-Donor Trust Fund, for example, provided greater certainty to the country and reduced transaction costs. “We were pleased to see ARC Ltd. provide $70 million in payouts to Pool 10, including $63 million to respond to the El Niño drought across Southern Africa,” Wilson says. Ensuring Financial Resilience in the Future For 2024 and beyond, Marek says it is important for ARC Ltd. to continue to deliver its promise of providing critical disaster risk insurance cost-effectively. “Payouts must be delivered quickly and smoothly, as speed is one of the key advantages of parametric insurance.” DONOR PARTNER I NTERV I EW
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