Africa’s insurance industry will provide US$14bn of cover to help the continent’s most vulnerable communities with the risks of climate disaster.
A group of 85 of the continent’s insurers are committing to underwrite the cover for floods, cyclones and droughts by 2030 under the African Climate Risk Facility (ACRF), launched at COP27. The pledge aims to create “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.
The ACRF will provide a domestically funded alternative to global initiatives such the World Bank's Global Risk Financing Facility and the Global Shield Financing Facility. It will offer protection for 1.4 billion people by providing insurance to sovereign states, cities, humanitarian and non-government organisations.
The group is also calling for US$900m in funding from development partners and philanthropies to support the project, much of which will go towards subsidising the cost of the premium to help governments and cities with limited fiscal resources to buy the cover.
Donor funds will be held in a trust and managed by the African Development Bank.
The 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’s Sustainable Development Goals.
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