Climate change: Germany govt subsidizes risk insurance by Euro 18m - NaijaAgroNet

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The Government of the Federal Republic of Germany announced subsidy on the margins of the ongoing United Nations 2021 United Nations Climate Change Conference (COP26), to the sum of €18million to subsidize the cost of disaster risk insurance for qualifying African Risk Capacity (ARC) Group Member States.

In her statement, the Parliamentary State Secretary to the Federal Ministry for Economic Cooperation and Development (BMZ), Dr. Maria Flachsbarth, stated that the commitment will help establish a Premium Support Facility for African governments and humanitarian agencies wishing to purchase climate related insurance. 

ARC, an African Union initiative that is led by 35 AU Member States, provides insurance for droughts and tropical cyclones. 

The standard approach to pay for climate disasters is slow and unpredictable, using humanitarian appeals or loans arranged after a disaster strikes. ARC replaces these outdated approaches by offering governments and humanitarian actors the opportunity to plan and purchase insurance that can provide fast payouts, quickly reaching people who need support. 

This prevents humanitarian needs from escalating, ultimately saving lives, protecting livelihoods and assets, and safeguarding development gains. Since 2014, 62 policies have been signed by Member States for cumulative insurance coverage of US$720 million for the protection of 72 million vulnerable populations in participating countries. 

Given that climate change is threatening to bring more frequent and severe extreme weather events, the Premium Support Facility will be crucial for the most vulnerable African countries. 

Following the Covid-19 pandemic, many African governments have severely constrained budgets and humanitarian agencies are struggling to meet unprecedented levels of need. 

This new funding will subsidize insurance premiums, decreasing in future years as countries and organisations are able to take over the costs using their national budgets and long-term sustainable financing. 

Germany’s support will catalyze effective risk management and help protect the poorest and most vulnerable people across the continent.