African Ministers of Finance in 2015 requested ARC to develop a product to meet countries’ rapid funding needs to contain high-impact infectious disease outbreaks and complement the efforts of the Africa Centres for Disease Control and Prevention. On 8 December 2022 ARC announced the launch of the product. “In our perspective of diversifying our product offering aimed at protecting the most vulnerable populations of our continent, we are today launching this new sovereign risk transfer mechanism through parametric insurance, which will allow our Member States to benefit, in addition to insurance against climate-related disasters, from coverage against epidemic risks,” said UN Assistant-Secretary-General and ARC Agency Director General Ibrahima Cheikh Diong. “We are confident that these predictable financing tools coupled with operational plans will strengthen the response capacity of our Member States while developing their expertise in the face of public health emergencies”.
Appleby’s role included establishing the segregated account framework for ARC Ltd to create the legal and operational framework for this globally unique program, demonstrating Appleby’s commitment to support development insurance programs designed to expand global public benefit and to protect vulnerable communities.
Brad Adderley said, “Congratulations to the highly dedicated ARC Ltd team on the launch of their first parametric insurance product against high-impact epidemic risks. This innovative and globally significant risk financing instrument will help Africa’s most vulnerable countries. We are proud of our decade-long relationship with ARC Ltd, and are pleased to support them as they continue to further innovate and build resilience against natural disasters, such as outbreaks and epidemics perils.
The epidemic risk was modelled by Ginkgo Bioworks; and the insurance product is issued by ARC Ltd, a financial affiliate of ARC Agency an intergovernmental organization. The insurance product is mainly reinsured by Munich Re; the insurance brokerage service was performed by AON; and the insurance premium was subsidized by the Swiss Agency for Development and Cooperation (SDC).
About the African Risk Capacity
The African Risk Capacity Group is composed of the ARC Agency and ARC Limited. ARC Agency was established in 2012 as a specialized agency of the African Union (AU) to help its Member States improve their capacity to better plan for, prepare for and respond to climate-related disasters. ARC Ltd is a mutual insurance structure providing risk transfer services to member states through risk pooling and access to reinsurance markets. Since 2014, 90 insurance policies have been signed by member states for a cumulative insurance coverage of US$900 million for the protection of 90 million vulnerable populations in participating countries.