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Chuks Udo Okonta
A group of over 85 insurers in Africa has pledged to create a financing facility to provide $14bn of cover to help the continent’s most vulnerable communities deal with climate disaster risks such as floods and droughts.
The commitment to create the African Climate Risk Facility (ACRF) was made on 9 November during the COP27 climate talks in Sharm El-Sheikh.
Against that backdrop, the African insurance plan is based around creating a scalable, local market-based funding tool to help countries better manage the financial risk of climate shocks and increase the resilience of its more vulnerable communities, the group said in a statement.
“This is the African insurance industry saying let’s come together and try and solve this ourselves,” said Mr Kelvin Massingham, director risk and resilience at the UK-government-backed development group, FSD Africa, one of the partners behind the launch.
“We have a massive risk gap in Africa and existing solutions aren’t working,” Mr Massingham said.
The ACRF will provide protection for 1.4bn people against floods, droughts and tropical cyclones by providing $14bn of climate risk insurance by 2030 to African sovereigns, cities, humanitarian organisations and NGOs, the insurers said.
The group is calling for $900m in funding from development partners and philanthropies to support the project, much of which will go towards providing a subsidy on the cost of the premium to help governments and cities with limited fiscal resources buy the cover.
These donor funds will be held in a trust and managed by the African Development Bank.
The insurance commitment is the first from the 85 signatories of the Nairobi Declaration on Sustainable Insurance, signed in April 2021 by the industry to support the UN Sustainable Development Goals.