Parametric insurer African Risk Capacity is commemorating its tenth anniversary.

The company was founded in 2014 with the sole mandate from the African Union heads of States to provide insurance and other risk transfer solutions to African countries.

To help African governments better respond to climate shocks through rapid payouts, African Risk Capacity has paid out more than $170-million in claims to support vulnerable communities.

“Behind these figures are communities across Africa that benefited after they were struck by natural disasters,” African Risk Capacity CEO Lesley Ndlovu says.

The company has also evolved from offering only drought insurance to covering both crops and livestock, and has diversified its product portfolio to include floods, tropical cyclones and health-related risks, such as outbreaks and epidemics.

“We started out with the premise that partnering [with] governments would be the most effective way to progress on this disaster risk management and financing journey, and it proved correct. We have successfully built and nurtured these relationships and been able to sign up 39 member States across Africa,” Ndlovu explains.

Beyond working with governments, African Risk Capacity has extended its partnerships to include providing insurance to humanitarian agencies such as the World Food Programme, Start Network, and the United Nations High Commission for Refugees to support vulnerable populations.

The company also works with the private sector through reinsurance to protect the incomes of small- to medium-scale farmers, who are most at risk from climate change impacts.

“We are . . . pleased by the number of countries that now utilise insurance as part of their disaster risk financing matrix. And while it's too early to say that the battle is won, we have made significant progress in shifting from reactive to more proactive disaster risk management and financing approaches over the past decade,” Ndlovu says.

Delivering products and risk transfer solutions tailored to individual countries’ changing needs are central to African Risk Capacity’s activities, he explains.

“The increasing severity and frequency of natural disasters is a critical focus for us. This phenomenon highlights the importance of having multiple financial instruments to complement the insurance offering,” Ndlovu says.

He adds that African Risk Capacity aims to expand its coverage across all 55 African Union countries.

“According to the latest data, we estimate that there are 700-million people whose economic livelihoods and lives are at risk due to climate change. Our mandate, mission and vision as an organisation is to provide coverage to all who need it. We will keep scaling up for even more impact,” Ndlovu says.