Alongside the United Nations 2021 United Nations Climate Change Conference (COP26), the Government of Germany has committed €18 million to subsidize the cost of disaster risk insurance for qualifying African Risk Capacity (ARC) Group Member States.
In a statement, the Parliamentary State Secretary to the Federal Ministry for Economic Cooperation and Development (BMZ), Maria Flachsbarth, explained that the commitment will help establish a Premium Support Facility for African governments and humanitarian agencies wishing to purchase climate related insurance.
ARC, an African Union initiative that is led by 35 AU Member States, provides insurance for droughts and tropical cyclones.
Since 2014, 62 policies have been signed by Member States for cumulative insurance coverage of $720 million for the protection of 72 million vulnerable populations in participating countries.
But following the Covid-19 pandemic, many African governments have severely constrained budgets and humanitarian agencies are struggling to meet unprecedented levels of need.
This new funding is expected to subsidize insurance premiums, decreasing in future years as countries and organisations are able to take over the costs using their national budgets and long-term sustainable financing.
“Germany has been a long-standing supporter of the African Risk Capacity. Earlier this year, in Germany we were affected by devastating floods – we have experienced ourselves the importance of preparedness and the vital role that insurance can play in recovery,” said Christian Krämer, Member of the Management Committee at KfW Development Bank.
“We are therefore delighted to be able to extend support to African nations who have been so badly affected by the covid-19 pandemic, so that they can take steps to prepare well to face the rising challenges of climate change.”
Ibrahima Cheikh Diong, United Nations Assistant Secretary-General / Director-General of the African Risk Capacity Group, also commented: “We are extremely delighted about the consistent support of the German Government to disaster risk reduction and mitigation in our Member States.”
“The grant is a clear testimony of the value of smart partnerships for smart disaster risk management and financing for early action. Through this assistance, we are optimistic that other partners will embrace our pitch for a Continental Premium Support Facility to help institutionalize sovereign parametric insurance culture in the region”
Christina Bennett, CEO of Start Network, added: “We are delighted to hear of Germany’s increase in support to ARC. By funding premiums for drought and tropical cyclone insurance in African countries, Germany is helping to ensure that vulnerable communities are better protected from the escalating risks that they face as a result of the climate crisis.”