The Mozambique government has secured USD 35 million of parametric cyclone insurance via the National Institute of Disaster Management (INGD), supported by Africa Specialty Risks, The World Bank, and PULA.
The inaugural, Mozambique cyclone parametric reinsurance program is designed to provide the country’s economy with resilience against the effects of cyclones through a payout to the state insurer when pre-determined triggers are met.
Africa Specialty Risks, which launched its parametric underwriting division in 2021, served as the lead reinsurer, while the windspeed and rainfall coverage was structured by PULA in collaboration with The World Bank.
Mozambique is reportedly Africa’s second most disaster prone country, and tropical storms and cyclones in the region have increased in frequency and intensity as a result of warmer ocean temperatures driven by climate change.
In fact, since January 2022, the country has been hit by three tropical storms or cyclones, affecting more than 900,000 people and destroying some 220,425 hectares of crops due to flooding.
This program is the first of its kind for cyclone cover in Africa, and continues the trend of parametric insurance expanding across the continent and having a positive impact on the livelihoods of more and more people.
Swiss weather index insurance and parametric risk transfer specialist CelsiusPro AG was also at the hear of getting this parametric arrangement to market, acting as the calculation agent, modelling the risk and working on product design, while also winning an original tender with the World Bank for this work.
Antonio Jose Beleza, Deputy Director of the National Emergency Operations Center at INGD, commented: “The cyclone program will provide crucial funding and stability to the Mozambique people and economy. The program will help build resilience in the economy, and highlights the importance of building risk mitigation instruments outside of the standard disaster risk insurance specifically designed to meet the increasing cyclone risk to Mozambique.”
Dr. Raveem Ismail, Head of Parametric Underwriting, Africa Specialty Risks, said: “This collaboration brings together the expertise of multiple organisations to provide a comprehensive solution for cyclone risk in Mozambique. We are confident that this program will make a real impact in reducing the economic impact of cyclones on the communities and businesses in the region.
“This is an important policy for Mozambique, one which has been designed in Africa, to meet the growing need for cyclone insurance, and is an example of what is possible for insurance products across the continent.”
Thomas Njeru, Chief Executive Officer (CEO), PULA, said: “We are pleased to have joined forces with the Institute of Disaster Risk Management of Mozambique, Africa Specialty Risks and the World Bank to deliver this cover to the Mozambique government. The program will help provide certainty for the most vulnerable communities in Mozambique, unlocking investment across the country with effective risk mitigation in place to protect against cyclones.”