FIGHT AGAINST CLIMATE CHANGE:
ARC NOW COVERS FLOODS
Antananarivo, 26 January 2026 – ARC has launched Africa’s first sovereign parametric flood insurance policy, marking a major innovation in climate risk financing and strengthening African countries’ capacity to respond to the growing impacts of climate change. The Republic of Madagascar is the first country on the continent to subscribe to this new coverage, with the insurance contract officially signed in January 2026.
“This new flood product reflects the continued evolution of Africa-led climate risk management solutions. It demonstrates our collective determination to move from a reactive approach to one centred on anticipation, using innovative tools tailored to the realities of our continent”, said Dr Jean Chrysostome Ngabitsinze, Director General of the African Risk Capacity Group.
Parametric insurance for rapid and predictable response
The parametric flood insurance solution developed by ARC, in close collaboration JBA Risk Management, is based on scientific data and advanced hydrological models, enabling objective and transparent payouts when predefined impact thresholds are reached. Unlike traditional insurance mechanisms, this approach allows governments to access financial resources rapidly, without waiting for lengthy post-disaster damage assessments.
The mechanism is designed to enable the disbursement of payouts within a timeframe of up to ten days following a confirmed flood event that triggers a payout, supporting timely emergency response and early recovery efforts.
The Government of Madagascar has obtained this sovereign parametric insurance policy covering flood-related losses and damages. The policy has been made possible through a long-standing partnership between the ARC and the African Development Bank, enabling the provision of coverage on concessional terms.
In Madagascar, the coverage aims to support the implementation of pre-approved contingency and response plans, helping to protect vulnerable populations, safeguard livelihoods and reduce the economic impact of flooding.
“The floods that affected the capital at the beginning of January, leaving more than a thousand people affected, once again highlight the extent of Madagascar’s vulnerability to climate hazards. In this context, parametric insurance represents a strategic lever to strengthen our rapid response capacity, mobilize timely financing, and better protect the most exposed populations”, said Dr Ramiarison Herijantovo Aimé, Minister of Economy and Finance of the Republic of Madagascar.
An initiative grounded in ARC’s mandate and experience
The launch of this first sovereign parametric flood insurance policy in Madagascar forms part of a long-term strategy led by the ARC Group to equip African countries with practical tools to anticipate climate shocks, reduce humanitarian impacts and strengthen community resilience.
Established by the African Union, African Risk Capacity supports its Member States in managing climate-related financial risks through mechanisms focused on prevention, preparedness and rapid response. ARC Ltd, the insurance affiliate of the ARC Group, operationalises this mandate by delivering tailored risk financing solutions aligned with the specific risk profiles of African countries.
“Flood risk is one of the most complex hazards to model. After several years of dedicated research and investment, we are pleased to launch this parametric flood insurance solution, built on the most advanced flood risk model and tailored to the specific particularities of African countries. This is only the beginning: we will roll out this solution across our Member States and continue expanding our portfolio to address additional climate risks in line with their evolving needs”, said David Maslo, CEO of ARC Ltd.
Since 2014, ARC Ltd has issued more than 300 sovereign insurance policies and paid out over USD 250 million in claims, enabling governments to respond swiftly to the needs of populations affected by climate-related hazards. Until now, ARC’s solutions have primarily covered droughts, tropical cyclones and epidemics. The introduction of parametric flood insurance therefore represents a new key milestone, broadening the range of tools available to address increasingly frequent and complex climate risks in Africa.
Media contacts:
Michèle Karambiri Andry Rasoanindrainy
Head of Communication Communications manager
ARC Group ARC Ltd
michele.karambiri@arc.int arasoanindrainy@ltd.arc.int