Posted on: Mon, 12/21/2020 - 12:14 By: arcuser
tropical cyclone risk insurance

Johannesburg, December 21, 2020 - The African Risk Capacity (ARC) Group is proposing a new insurance mechanism to African countries in the South-West Indian Ocean (SWIO) region to cope with the devastating effects of the tropical cyclones. This parametric insurance product will provide countries with predictable and rapid financing for early response to cope with emergency situations caused by tropical cyclones. The mechanism is a significant milestone to building resilience to climate-related disasters on the African continent.

The Southwest Indian Ocean Region (SWIO) region is one of the most active areas globally in terms of tropical cyclone formation. On average, thirteen cyclone events with wind speeds above 63 km/h and possibly exceeding 200 km/h, occur each year in the SWIO region. High wind speeds are a key factor contributing to damages from tropical cyclones.

Developments in the SWIO region in 2019, including the devastating effects of cyclones Idai and Kenneth in Mozambique, led to a renewed country interest in parametric tropical cyclone insurance coverage. Consequently, ARC developed a model capable of accurately estimating the risk and economic losses due to tropical cyclone events adapted to the SWIO countries such as Mozambique, Madagascar, Comoros, Mauritius, Seychelles, and Tanzania.

“Our goal is to continue to diversify our product offering to meet the needs of our Member States effectively. This new offer will allow our Member States to better anticipate and manage extreme weather events while ensuring that their impact on the population is mitigated, " stated UN-ASG and African Risk Capacity Group Director-General, Ibrahima Cheikh Diong.

Madagascar became the first country in the region to take out the ARC tropical cyclone parametric insurance coverage, thanks to the KfW premium support for the 2020-2021 season.  Madagascar’s participation will complement government efforts towards reducing the impacts of climate change and weather variability on the most vulnerable populations.

Indeed, Madagascar, the largest island in Africa, is naturally prone to cyclones. According to UNOCHA, an average of 1.5 cyclones affect Madagascar each year, the highest number in Africa, and each severe cyclone affects an average of 700,000 people.

“As part of the implementation of the national policy on disaster risk management, Madagascar has subscribed to the new insurance product against Tropical Cyclones offered by the ARC Group to better protect the population against the enormous damage caused by extreme climatic events but also allow the country to recover quickly when affected by cyclones,” declared H.E. Richard Randriamandrato, Minister of the Economy and Finance, Republic of Madagascar.



  1. Simon Pierre Diouf | Communications Officer | African Risk Capacity (ARC) | E-mail:
  2. Esther Azaa Tankou | Head of Information Division| Directorate of Information and Communication, African Union Commission | E-mail:

About ARC Group:

African Risk Capacity (ARC) Group consists of ARC Agency and ARC Insurance Company Limited (ARC Ltd). ARC Agency was established in 2012 as a Specialized Agency of the African Union to help the Member States improve their capacities to better plan, prepare and respond to weather-related disasters. ARC Ltd is a mutual insurance facility providing risk transfer services to the Member States through risk pooling and access to reinsurance markets. ARC was established on the principle that investing in preparedness and early warning through an innovative financing approach is highly cost-effective and can save upward of four dollars for every dollar invested ex-ante.

With the support of the United Kingdom, Germany, Sweden, Switzerland, Canada, France, the European Union, the Rockefeller Foundation, and the United States, ARC assists the AU Member States in reducing the risk of loss and damage caused by extreme weather events affecting Africa’s populations by providing, through sovereign disaster risk insurance, targeted responses to natural disasters in a more timely, cost-effective, objective and transparent manner. ARC is now using its expertise to help tackle some of the other most significant threats faced by the continent, including floods and outbreaks & epidemics.

Since 2014, 62 policies have been signed by the Member States for cumulative insurance coverage of US$719 million for the protection of 72 million vulnerable populations in participating countries.

For more information, please visit: (ARC Tropical Cyclone)

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