African Risk Capacity Ltd, insuretech Pula sign partnership to deliver agriculture index insurance

KENYA – The African Risk Capacity Limited (ARC Ltd) has announced a partnership agreement with Kenya’s insurance intermediary Pula to deliver best-in-class agriculture index insurance products to protect African farmers from climatic risks.

Every farming season, African farmers are exposed to a wide range of climate risks including drought, excessive rainfall, pests and diseases, among several other perils that negatively affect their yields.

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As an aggregator specialising in meso and micro parametric insurance in agriculture, Pula provides the levers to connect participating farmers with regional insurance companies and global reinsurance firms to underwrite such risks.

Under its inclusive growth strategy, ARC Ltd is currently diversifying its risk portfolio to non-sovereign risks in addition to exploring partnerships with private and public sector players to deliver holistic disaster risk financing mechanisms.

“We envisage a win-win partnership that will leverage Pula best in class index insurance products and technology with ARC’s strong partnerships with governments to provide ground-breaking products to 15 million farmers.”

Thomas Njeru – Founder and Co-CEO Pula.

Commenting on the goal of the partnership, the CEO, ARC Ltd, Lesley Ndlovu indicated that a formal collaboration relationship with Pula is necessary to help achieve their mission to promote harmonised resilience solutions for protecting African lives and livelihoods vulnerable to natural disasters caused by climate change and other  perils affecting the continent.

“The ARC Group is expanding its product offerings to African member states currently and by experience, we have seen that there will always be farmers whose governments may, by reason of fiscal constraints, not be able to take up an umbrella Sovereign disaster risk policy.

“Working with Pula will enable us to extend coverage to member states and their partners in a timely and targeted manner on a mutually adaptable basis,” said Ndlovu.

The partnership, which will run for an initial period of 3 years will enable Pula to work closely with ARC Group in the areas of product development, marketing, premium collection and claims disbursements, among others.

Also, Pula’s strong capacity in Area Yield Index, for example, will complement ARC Ltd.’s strength in drought covers; just as the existing good relationships between Pula and farmers and other aggregators will benefit from ARC Ltd.’s tested relationships with African governments and industry regulators.

“ARC Limited is the first of its kind in sovereign disaster risk insurance in Africa”, said Thomas Njeru, the Founder and Co-CEO of Pula.

“The development insurance approach of the ARC Group resonates with Pula mission to provide an end to end management of the delivery of insurance to farmers, including field operations, farmer onboarding, education and claims assessment and pay-outs.

“We envisage a win-win partnership that will leverage Pula best in class index insurance products and technology with ARC’s strong partnerships with governments to provide ground-breaking products to 15 million farmers,” he added.

With the partnership Pula we expects to push the boundaries of product performance to its customers and radically increase the access to insurance for millions of farmers across Africa giving them access to the tools they need to become resilient in these challenging times.

In just over 6 years of operations, 56 policies have been signed by the ARC Member States with US$ 83 million paid in premiums for cumulative insurance coverage of US$ 641 million and the protection of 64.1 million vulnerable populations in participating countries.

From that, ARC Ltd made US$60m pay-outs to the governments of Senegal, Mauritania, and Malawi and the START Network following droughts episodes in 2014, 2015 and 2019.

These funds have gone towards assisting over 2, 480, 500 million people whose livelihoods rely on agriculture, preventing the loss of hard-earned developmental gains in addition to 1, 295, 189 livestock.

Governments have used ARC Ltd insurance pay-outs to scale up cash transfers, subsidize livestock feeds, replenish depleted food reserves, and distribute emergency food supplies.

That is in addition to recent pay-outs of US$ 2.13 million made to the Republic of Madagascar to cover 600,000 vulnerable population and US$ 1,755,890 to the Government of Zimbabwe and WFP to support over 500,000 people affected by the drought in the 2019/2020 agricultural season in both countries.

In under 5 years of Pula operations, Pula has insured agricultural investments worth US$ 520 Million across 11 countries in Africa by working with governments, input companies and credit providers with premium payments of over US$ 18 million being made and insurance claim pay-outs of US$ 5.5 million made due to low farm yields  triggered by a wide range of climate risks such as droughts and flooding as well as other farm risks such as  diseases or pests.

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