African Risk Capacity (ARC)

African Risk Capacity Limited (ARC Ltd) provides insurance and other risk transfer solutions to African governments. It was founded in 2014 as the financial affiliate of the African Risk Capacity (ARC) Group, a Specialized Agency of the African Union. It is a development mutual insurer.

ARC Ltd serves African Union member states and farmer organizations. It pools climate and disaster risks across participating countries and transfers part of that risk to international reinsurance markets. This allows countries to insure themselves more affordably than they could on their own.

Its cover is parametric. Payouts are triggered automatically when predefined conditions are met, such as rainfall dropping below an agreed threshold. Payment does not wait for damage assessments. Governments therefore receive funds quickly and predictably, often before a crisis peaks. Countries agree in advance on contingency plans for how payouts will be used, so the money reaches affected populations quickly and is spent where it is needed.

ARC Ltd’s goals are to strengthen countries’ financial resilience to climate shocks, to enable earlier and better-planned disaster response, and to protect lives, livelihoods and food security. It continues to develop new products to meet member states’ changing needs and to cover a wider range of climate-related hazards.