African Risk Capacity (ARC) has launched Africa’s first sovereign parametric flood insurance policy, with the Republic of Madagascar becoming the first country on the continent to subscribe to the new coverage.
ARC developed the parametric flood insurance solution in close collaboration with JBA Risk Management and is based on scientific data and advanced hydrological models. This enables objective and transparent payouts when predefined impact thresholds are met. Unlike traditional insurance mechanisms, the approach allows governments to access financial resources rapidly, without waiting for lengthy post-disaster damage assessments.
The mechanism is designed to enable payouts to be disbursed within up to ten days following a confirmed flood event.
The Government of Madagascar has secured the sovereign parametric insurance policy to cover flood-related losses and damages. The policy has been made possible through a long-standing partnership between ARC and the African Development Bank, enabling coverage to be provided on concessional terms.
In Madagascar, the coverage is intended to support the implementation of pre-approved contingency and response plans, helping to protect vulnerable populations, safeguard livelihoods, and reduce the economic impact of flooding.
Dr Ramiarison Herijantovo Aimé, Minister of Economy and Finance of the Republic of Madagascar, said, “The floods that affected the capital at the beginning of January, leaving more than a thousand people affected, once again highlight the extent of Madagascar’s vulnerability to climate hazards. In this context, parametric insurance represents a strategic lever to strengthen our rapid response capacity, mobilise timely financing, and better protect the most exposed populations.”
The launch of the policy in Madagascar forms part of a long-term strategy led by the ARC Group to equip African countries with practical tools to anticipate climate shocks, reduce humanitarian impacts, and strengthen community resilience.
Dr Jean Chrysostome Ngabitsinze, Director General of the African Risk Capacity Group, said, “This new flood product reflects the continued evolution of Africa-led climate risk management solutions. It demonstrates our collective determination to move from a reactive approach to one centred on anticipation, using innovative tools tailored to the realities of our continent.”
David Maslo, CEO of ARC Ltd., added, “Flood risk is one of the most complex hazards to model. After several years of dedicated research and investment, we are pleased to launch this parametric flood insurance solution, built on the most advanced flood risk model and tailored to the specific particularities of African countries. This is only the beginning: we will roll out this solution across our Member States and continue expanding our portfolio to address additional climate risks in line with their evolving needs.”
