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Declaration of the African Risk Management Capacity (ARC) on the occasion of the International Day for Disaster Risk Reduction

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Declaration of the African Risk Management Capacity (ARC) on the occasion of the International Day for Disaster Risk Reduction

One of the issues to be addressed is the affordability of premiums, as it is quite expensive to insure against natural disasters.

JOHANNESBURG, South Africa, October 13, 2021 / APO Group / –

As COP26 approaches, we should focus on the devastating impact of climate change as we mark today the International Day for Disaster Risk Reduction, celebrated annually to raise awareness of the risks associated with disaster risk reduction. disasters.

That’s the word of Lesley Ndlovu, CEO of African Risk Capacity (ARC) Limited, a specialist insurance company that provides parametric coverage to African countries against extreme weather events and natural disasters.

Alarm bells for humanity have been sounded around climate change issues, following the recent publication of the Intergovernmental Panel on Climate Change and increased media interest in the talks on the UN on the climate in November.

In Africa, the UN Special Report on Drought has warned that drought may well be the next pandemic as Africa faces “exponential collateral damage” posing systemic risks to its economies, its investments in infrastructure, water and food systems, public health, agriculture and livelihoods, and threatening to reverse its modest development gains and sink into higher levels of extreme poverty.

There is simply no time to waste in “taking decisive action”.

Changing the disaster risk architecture

Advocating for a change in the current disaster risk architecture, Ndlovu believes the response is unacceptably slow, ineffective and reactive, as climate disasters increasingly threaten Africa, a continent that is suffering the most climate change, but which contributed the least to climate emissions.

“It is taking far too long for African countries to mobilize the immediate resources they need for relief efforts, to save lives and livelihoods. The traditional response to disasters is extremely slow and inefficient, and by the time governments and NGOs have raised enough money to respond significantly, the problem has worsened and additional funding is needed, ”says Ndlovu.

The role of the ARC Group as a parametric insurer is of crucial importance in building resilience and ensuring that a country is able to bounce back quickly from a natural disaster. “We monitor the rainfall of the countries in the risk pool and ARC Limited’s sovereign insurance payments are triggered when the system reveals that there has not been enough rain, before the droughts reach a stage. crisis, farmers are left with nothing and people are starving, ”says Ndlovu.

The program also helps countries build their capacity to manage climate-related risks. In this way, he tries to transform the disaster risk management architecture to be proactive and not reactive, explains Ndlovu.

“When it comes to mitigating and managing risk, you have to look at why governments don’t act. On the insurance side, one of the problems to be solved is the affordability of premiums because it is quite expensive to insure against natural disasters and the payment of premiums competes with other national priorities ”, explains Ndlovu.

Sovereigns who participate in the ARC program must also develop a contingency plan that sets out at a very high level how the government would spend any insurance payments they receive from ARC Limited.

“With this plan, we are making sure that the funds reach the intended beneficiaries. Having a plan dramatically increases the speed of execution because at some point the government has received the funding, they already have a plan on how to disburse it, ”he says.

Insurance builds resilience

Emily Jones, Climate and Disaster Risk Finance Advisor for WFP, highlights the challenges of convincing authorities to be more proactive than reactive in preventing human suffering and hardship when events such as drought occur.

“Unfortunately, no single person or organization can effect the necessary change on their own. Change begins with building resilience and assurance plays an important role in this regard, especially in climate change,” Jones said.

Governments pay a premium each year and receive the agreed payment if and when a predicted disaster occurs. “This money can then be used to help those affected, with the remainder of the payment going to cover other consequences that might not have been expected, such as conflict or loss of progress in terms of important development projects. local development, ”she says.

“Humanitarians strive to emphasize the need to anticipate crises and act before they occur to avoid human suffering. After all, why wait if you don’t have to?

ARC Limited is the first African company to join the Net-Zero Asset Owner Alliance organized by the UN. With $ 100 million in its kitty, the organization has the largest balance sheet dedicated to climate risks in Africa.

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