World’s largest non-governmental climate insurance scheme launched
A new climate insurance programme designed to increase access to finance and provide disaster recovery lending to some of the world’s poorest people was launched.
The insurance programme, named the African and Asian Resilience in Disaster Insurance Scheme (ARDIS), will provide cover to farmers and small businesses, targeting African and Asian smallholder farmers, alongside VisionFund International, World Vision’s microfinance arm. The scheme covers borrowers in six countries in Africa and Asia: Kenya, Malawi, Mali, Zambia, Cambodia and Myanmar.
The initiative, which has been targeted with meeting 1% of the G7 goal to increase access to climate risk insurance for up to 400 million people in developing countries could result in over 690,000 families totaling up to four million people benefitting from coverage they did not have before.
"On a daily basis, they will be able to turn on the computer and access indices to monitor cat and weather risks relevant to the part of the world in which they live. This will inform decision making and lead to an improvement in resilience," said Global Parametrics CEO Hector Ibarra.
Under the programme, beneficiaries will be able to receive immediate access to much-needed credit required by farmers and small businesses to get back on track after a climate shock. This so-called ‘recovery lending’ will be provided through VisionFund’s microfinance institutions.
Loans will be disbursed during and after disasters to help the businesses maintain or restart their activities. The swift access to financing is enabled by Global Parametrics’ climate-based data modelling, which verifies the climate event and triggers access to both contingent liquidity and risk capital by the microfinance institutions.
This injection of funds restores balance sheets, ensuring business continuity or enhancement of operations and services, despite the common disruptions created by environmental calamities.
As another sign of the changing picture, ATI has recently raised its own premiums and cut its exposure to smaller farmers because of the impact of erratic weather patterns on harvests. “We have put up the cost of our insurance and lowered our exposure. We’re not declining cover but we have a lower appetite level and need to factor in the risks,” Kibonde said.