A Bermuda-based insurance company is providing payouts to Malawian households that are drought-affected and will be paid to citizens through the country’s government. Nine years ago, the African Risk Capacity Group (ARC) set up a hybrid mutual insurance company called ARC Insurance Company to serve 35 countries in the African Union, impacted by adverse weather conditions.
By delivering targeted solutions to disasters in a more timely, cost-effective, objective, and transparent manner, the ARC aims to help AU member states reduce the risk of loss and damage brought on by extreme weather events and natural disasters that affect Africa’s populations.
The parametric insurance offered by ARC Limited protects against weather-related dangers, which are occurring more frequently and severely as a result of climate change.
The Malawian government chose the sub-national triggering risk transfer to manage localised drought episodes. It also insured a total of four cluster policies that covered various parts of the nation.
Putting measures in place
The compensation is just one element of the support that ARC offers. For the greatest possible use of any funding that may be made available, ARC works with government policies and goals, such as the Malawi National Disaster Risk Financing Strategy.
To help authorities prepare for and respond to extreme weather occurrences, an ARC delegation met with representatives of the government and the civil society last year to share knowledge about weather insurance for climate resilience.
The World Food Programme (WFP), which continues to be a key player in promoting better risk-management practices and funding for climate change implications, will receive the $14.2 million. Up to 65 000 farming households in Malawi received cash payouts totaling $2.4 million last November from a UN WFP agricultural insurance program after substantial amounts of crops were lost by pests and drought.
Malawi experiences regular floods and droughts. It is critical to comprehend the effects of these extreme climate events in a country where agriculture plays a significant role in the economy. Not only are rural livelihoods harmed, but non-farm and urban households are also at risk due to the close production and pricing ties between agriculture and the rest of the economy.