The African Climate Foundation (ACF), in collaboration with Krutham and with input from a range of industry experts, is set to unveil a pioneering series of country-focused reports titled “Scaling Insurance for Climate Resilience in Africa” recently. This timely initiative seeks to explore the importance of the insurance sector in strengthening climate adaptation and resilience across the African continent.
Commissioned by the ACF, the reports focus on three African countries, Malawi, Kenya, and South Africa. The research is rooted in in-depth interviews with leading insurance experts, supported by comprehensive desk research and peer review insights from panel discussions with prominent insurance industry leaders.
Through this analysis, the reports aim to address two key objectives:
(i) Gaining a deeper understanding of the role insurance could play in Africa’s climate adaptation and resilience strategies.
(ii) Supporting the ACF’s ongoing efforts to establish Adaptation and Resilience Platforms (ARIPs) in pilot African nations.
As climate change continues to pose significant threats to Africa’s economic and environmental future, the need for innovative solutions has never been greater. According to the World Meteorological Organization, Africa is experiencing climate impacts faster than the global average, with rising temperatures and sea levels exacerbating the risks of extreme weather events.
In response, the continent must urgently focus on reducing its vulnerabilities through adaptation measures while improving its ability to manage residual climate risks.
The 2024 UNEP Adaptation Gap Report highlights the stark gap in adaptation financing for Africa. The continent’s estimated annual needs are $61 billion, yet only $13 billion in international public finance reached the region in 2022.
Furthermore, many African nations are heavily reliant on debt-based finance mechanisms, which place further strain on already fragile economies. The African Development Bank estimates climate change costs the continent between 5 and 15 per cent of GDP growth, underscoring the critical need for effective climate risk management strategies.
In this context, scaling insurance solutions for climate resilience offers a potential lifeline. The ACF’s reports highlight the insurance sector’s unique role in mitigating and transferring climate risks and in providing a viable alternative to traditional funding mechanisms.
By examining the state of the insurance market in countries with varying levels of economic development and climate risk management strategies, the reports aim to spark discussions on how to expand insurance access and make it a cornerstone of Africa’s climate adaptation efforts.
The analysis also delves into practical solutions for improving insurance coverage for low-income populations, ensuring that policies are both inclusive and financially sustainable. The reports also explore the potential for public-private partnerships to catalyse market growth, drive innovation, and enhance climate resilience at scale.
Key insights from the report include:
- Critical success factors and opportunities for the development of the insurance market in Africa.
- Strategies for expanding insurance access to underserved communities.
- Considerations around ensuring the solvency and sustainability of insurance and reinsurance companies.
- The role of public-private partnerships in enhancing the effectiveness of insurance as a tool for climate resilience.
Through this research, the ACF hopes to provide a comprehensive framework for scaling insurance solutions across Africa, empowering governments, insurers, and communities to better manage climate risks and build long-term resilience.
The launch of these reports marks a significant milestone in the ACF’s mission to drive climate adaptation in Africa. By advancing discussions on the role of insurance, the Foundation aims to catalyze innovative solutions that will safeguard the continent’s future against the growing challenges posed by climate change.