The African Risk Capacity (ARC) Group is proposing a new parametric insurance mechanism to African countries in the South West Indian Ocean (SWIO) to help mitigate the damages caused by tropical cyclones.
The product, already in use by Madagascar, was developed by ARC in response to a growing demand for parametric coverage following the impacts of Cyclones Idai and Kenneth in Mozambique.
The SWIO region is one of the most active areas globally in terms of tropical cyclone formation, with an average of thirteen cyclone events with wind speeds above 63 km/h and possibly exceeding 200 km/h occurring each year.
“Our goal is to continue to diversify our product offering to meet the needs of our Member States effectively,” said UN-ASG and African Risk Capacity Group Director-General, Ibrahima Cheikh Diong.
“This new offer will allow our Member States to better anticipate and manage extreme weather events while ensuring that their impact on the population is mitigated.”
Madagascar became the first country in the region to take out the ARC tropical cyclone parametric insurance coverage, thanks to the KfW premium support for the 2020-2021 season.
As the largest island in Africa, Madagascar is effected by an average of 1.5 cyclones each year, the highest number across the continent.
“As part of the implementation of the national policy on disaster risk management, Madagascar has subscribed to the new insurance product against Tropical Cyclones offered by the ARC Group to better protect the population against the enormous damage caused by extreme climatic events but also allow the country to recover quickly when affected by cyclones,” said Richard Randriamandrato, Minister of the Economy and Finance, Republic of Madagascar.