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Insuring countries against natural disasters: Pool rules

Authors
Daniel J. Clarke and Ruth Vargas Hill
Publisher
International Food Policy Research Institute

The African Risk Capacity (ARC) pool is a proposed pan-Africa drought risk pool that would insure against drought risk in Africa south of the Sahara. Donors and, to at least a notional extent, member countries would pay annual premiums. In return, if, for instance, satellite weather indexes call for a response to a severe drought, the pool would make timely claim payments to insured governments. To be eligible to join the ARC pool, each government would have to develop a contingency plan that describes how it will use any claim payments. If fully operationalized, the ARC pool will mark a major change in how donors fund emergency support to countries in Africa during times of need.

In this brief, we summarize the key lessons that have emerged from a cost-benefit analysis of the ARC pool and discuss how these lessons can be more broadly applied to other cross-country pools.
 

Publication date
Source / Citation
Clarke, D. J., and R.V. Hill. "Insuring countries against natural disasters: Pool rules," IFPRI Policy Brief No. 22, July 2013.
Location
https://www.ifpri.org/publication/insuring-countries-against-natural-disasters-pool-rules-pool-rules-pool-rules-pool-rules