Luis Alton, Senior Financial Sector Specialist at the World Bank’s Disaster Risk Financing and Insurance Program highlighted the inefficiencies in current resource allocation for mitigating climate shocks. “While many countries have multiple instruments to help them with this, they’re not joined up strategically, which can lead to inefficiencies,” he said. “For example, where insurance should be used for extreme events, it is used to cover less extreme events instead.”

The retreat also addressed the rising number of displaced persons due to climate events. In 2010, there were 44 million globally displaced persons worldwide, including those internally displaced, refugees, those who have crossed borders, and those looking for protection. In 2024, this number has spiked to 120 million people.

“Many of these refugees come from areas where there are other conflicts, like war and violence. They also live in climate disaster risk areas and will be further displaced as extreme weather events increase. So, the numbers are only going to rise. It’s clear that the models in place are not enough,” said UNHCR Climate Insurance Lead and Strategic Risk Advisor Mojisola Terry.

“We need to disrupt the way institutions respond to, utilise resources, and fund their climate interventions,” Terry added, explaining that it should no longer be a debate. “We want to demonstrate that investing in risk mitigation will lead to more resilient communities, better assistance, better targeting, and hopefully address the humanitarian landscape.”

Phil Stevens, International Finance Director at the UK Foreign Commonwealth and Development Office (FCDO), who also serves on the ARC Group Board, referred to key climate discussions, including those at COP29 this year, saying: “ARC Ltd. is going to be instrumental to these conversations, as well as the broader conversations we’re hearing around the Bridgetown 3.0 initiative and the call to action from President Biden, to name a few.”
The Bridgetown initiative calls for urgent action to reform the international financial architecture, while President Joe Biden has called on global leaders to catalyse climate action through the Major Economies Forum on Energy and Climate.

Increasing impact through innovation

The ARC Group’s innovative approach to climate resilience was highlighted by Group Governing Board Chairperson Dr Mothae Anthony Maruping. He explained that, in the 12 years of its existence, the group has expanded its products beyond drought to include outbreaks and epidemics, tropical cyclones and floods, and brought humanitarian donor partners on board. “We will keep challenging ourselves to come up with new and creative solutions by actively listening and engaging fully in new dialogues that will define our path,” he said.

Terry noted that climate resilience must be looked at holistically. “That’s why the partnership between the UNHCR and ARC Ltd. to increase protection to those who need it the most through the Replica programme is logical and timely,” she explained. The Replica programme extends ARC Ltd.’s parametric insurance to humanitarian organisations. Through the programme, humanitarian organisations can take out insurance on behalf of a country against climate-induced threats and disease outbreaks.

The UNHCR took out a modest Replica premium for drought insurance in the central region of Malawi for 2024. In April, the release of funds was triggered, resulting in a payout which assisted 20,000 people - 60% of Malawi’s refugee community.

“When it comes to implementing these resources, we always look at how we can reach out to the most vulnerable,” said Doshanie Kadokera, Malawi Government coordinator. Other partners and donors have also been inspired. “Humanity Insure has agreed to supplement the premium subsidy for Malawi for 2024/25,” Terry explained.

The UK, through FCDO, has been a donor partner of ARC Ltd. since its inception in 2014. This long-term commitment demonstrates FCDO’s support for the company’s work on the continent. "Since then, we have provided coverage to 130 million African people," shared Stevens.

Continuous improvement for climate resilience

Terry pointed out that no perfect climate resilience model exists, only opportunities to improve. “The UNHCR is committed to continuing to work with ARC Ltd., as well as other partners, to make sure we have access to the best possible data so we can plan and prepare better in the event of disasters.”

Kadokera added that there is a need for ownership among governments when it comes to building climate resilience in African countries. “Malawi’s risk management strategies and policies with ARC Ltd. and partners like the UNHCR, reflect our commitment to protecting our citizens and their livelihoods.”

ARC Ltd. believes in looking internally to constantly improve. “Looking ahead, it’s clear that we still have a lot of work to do. Our focus remains on three priorities: expanding coverage to all 55 African Union countries, managing capital funding and reinsurance to maintain an A- credit rating, and strengthening its team and processes for greater efficiency,” explained CEO Lesley Ndlovu.

Unified action the key

The retreat was also an opportunity to celebrate ARC Ltd.'s 10th anniversary and reflect on its achievements while charting a forward-looking strategy for sustainable climate risk management across the continent. “It was truly moving to hear from so many of our partners and members who shared their experiences and congratulatory messages. These testimonials are a testament to our shared success,” said Ndlovu. Since its inception in 2014, ARC Ltd has paid out $229.8 million in claims, provided 1.2 billion insurance coverage and protected 30 million Africans per year.

ARC Ltd. Board Chair Dr Maxwell Mkwezalamba lauded ARC Ltd.’s pivotal role within the broader ARC ecosystem. “Over the past decade, ARC Ltd. has translated visionary goals into actionable financial solutions for member states, delivering critical insurance coverage that protects them from the devastating impact of climate disasters.”

Dr Maruping emphasised the importance of continued collaboration among stakeholders to address the climate insurance gap: “We are operating in a very dynamic industry, and while we can all agree that the challenges are complex, when we stand together as a united front, there are massive opportunities for all of us.”

He accredited ARC Ltd.’s success to its partnership ethos in Africa, “whether it's with partner governments like our own, the African Development Bank, the World Bank, or the private sector. I think ARC Ltd. is a great example of how we can modernise not only partnerships, but development finance as a whole to continue to impact people's lives." 

Ndlovu concluded that ARC Ltd. will continue working closely with governments, financial institutions, and technical partners to develop sustainable, scalable solutions for climate resilience.