Page - 497 - in Loss and Damage from Climate Change - Concepts, Methods and Policy Options

21 InsuranceasaResponse toLossandDamage? 497 hurricanes and earthquakes to its participatingmember countries (UNISDR2017). A second regional pool, Africa Risk Capacity (ARC)was established in 2012 as a specialised agency of the African Union to help member states improve their capacities to better plan, prepare and respond to natural disasters (Wilcox 2014). Recently,athirdregionalsovereignriskpoolingarrangementhasbeencreatedforthe Pacificislandstates,thePacificCatastropheRiskAssessmentandFinancingInitiative (PCRAFI) (WorldBank2017). Inall threecases,disbursements fromthepoolgo to participatinggovernmentsfor thepurposeofsupportingtheirpost-disasterreliefand reconstructionefforts,althoughonlyoneof thepools(ARC)makesrequirementson how thedisbursements areusedby requesting itsmembers toprovidedetails about contingencymanagement anddisbursementwhen they join thepool. Akeyfeatureofall threepools is theparametricnatureof the insurancecontract, which, asdiscussed formicro-insurance,makespayments faster and theclaimpro- cesslesscostlythantraditionalindemnity-basedinsuranceproductsforwhichclaims arepaidbasedonassessments of loss throughon-site verification. Fast payment of claims is especially critical. Intervening quickly after a disaster can provide gov- ernmentswith funds that supporthouseholdsandprevent theadoptionofdamaging copingstrategies (suchas sellingoffor slaughtering livestock).Abenefit-cost anal- ysiscarriedoutontheARCshowsthatgettingaid tohouseholds in thecritical three monthsafterharvestcanresult ineconomicgainsofoverUSD1,200perhousehold assisted(ClarkeandHill2013).CCRIFannouncedthatitspayoutstoCaribbeangov- ernmentsdue to the impactsofHurricaneIrma,whichdevastatedmanyislandstates inSeptember 2017,will reach$31.2million, and the facility has nowpassed$100 millionof payouts tomembers since its launch.All of the $100millionof payouts weremade tomemberswithin14daysof thecatastropheevents that triggered their parametric insurancepolicies (ARTEMIS2017a). Advancing ex ante riskmanagement is also important in all three regional pro- grams, especiallywith respect todeveloping theknowledgebaseonwhichdisaster risk reduction andmanagement policy can be pursued. Each poolmakes an effort, paid for by donors, tomeasure and quantify disaster risk in the relevant region by examining not only the hazard but also exposure and vulnerability using detailed mapping, data andmodelling toolsdevelopedexplicitly for thispurpose.Anexam- ple isARC’smodelling platform calledAfricanRiskView. It providesmodelling input toARCfor insurancepurposes, but also aims to be afinancial earlywarning tool, supportinggovernmentdecision-makerswithcost estimatesbeforeandduring a drought season.As such it can trigger early action and risk reductionmeasures. Themodels and quantification of risk constitutemajor progress as privatemarkets and the governments of the regionwere not supplying this information previously. If combinedwith technical assistance and capacity building these advances in risk informationcanleadtoacultureofriskmanagementacrossgovernments,potentially inducingamoreanticipatoryapproach to risk (VividEconomicset al. 2016). ARCiscurrentlypreparing for the launchofanadditional tool, theExtremeCli- mateFacility(ARC-XCF),whichaimstoaddressadaptationandresilienceshortfalls inAfricancountries in the faceof climatechange.XCFisdesigned to takeaccount of increasing riskof extremeweather event activity inorder todisperse funds tobe