Global risk pools African Risk Capacity Limited (ARC Ltd.), CCRIF SPC (formerly The Caribbean Catastrophe Risk Insurance Facility) and Pacific Catastrophe Risk Insurance Company (PCRIC) have agreed to a partnership at the recent COP27 climate conference.
The parties signed a memorandum of understanding (MOU) on the sidelines of COP27 in Sharm el Sheikh, Egypt to formalise and establish a framework for enhanced cooperation and partnership between them.
At the signing, Isaac Anthony, CCRIF CEO said: “This is an opportunity to take risk pools to the next level so that these are not just seen as insurance or mechanisms for transferring risk, but also are viewed as tools to scale up disaster risk finance in a very significant way to enable governments to provide higher levels of financial protection for their populations, including the most vulnerable.”
Anthony explained further that the MOU paves the way for the three risk pools to collaborate on sharing best practices in parametric insurance models, developing new and innovative DRF instruments and undertaking joint initiatives focused on advocacy, capacity building and training.
“One of the exciting things CCRIF is looking forward to is facilitating access to other types of DRF instruments,” he added. “It will be important for example for the various risk pools to work collaboratively in engaging Global Shield, for example, to ensure that the role of risk pools is recognised in that particular effort.”
The Global Shield against Climate Risks initiative, launched by The Vulnerable 20 Group of Finance Ministers (V20) of 58 climate vulnerable economies and the Group of Seven (G7) at COP27, aims to provide pre-arranged financial support for deployment during climate disasters.
“The Global Shield is an essential element in helping risk pools scale up their efforts to make insurance more accessible, affordable and available to the people who need it the most in the face of increasing frequency and severity of natural disasters,” said Lesley Ndlovu, ARC Ltd. CEO.
“The signing of this MOU among the global risk pools, sets the tone for a higher level of collaboration and a strong foundation on which to strengthen each other and our efforts and initiatives going forward,” he explained.
The MOU includes the development and sharing of best practices in parametric model development and management, as well as data management relating to parametric insurance instruments.
Advocacy and capacity building will form a key component of joint activities to help raise understanding of the role of risk pools as development insurance facilities supporting economic and social development objectives of risk pools’ member countries.
PCRIC CEO Aholotu Palu further commented. “While risk pools play an important role in moving the management of disaster and climate shocks away from ad hoc humanitarian assistance and focus the DRM ecosystem on an ex-ante approach, there is still somewhat a lack of understanding of the role we play in helping countries protect their financial means to build resilience and shield themselves from loss and damage caused by climate change. Through the signing of this MOU, we elevate collectively the role we play in helping countries fight the impact of climate change.”