Sovereign disaster insurance initiatives are a relatively new approach to tackling the increased vulnerability to disasters of communities across the world.
Ashira Perera Felicity Le Quesne Marcela Tarazona Michele Binci A0603 Africa
Little is known on their potential impacts or how to maximise their effectiveness. As an initial step, DFID have commissioned us to complete an Independent Evaluation of the African Risk Capacity. ARC is an innovative African Union Initiative aimed at combining the concepts of early warning, disaster risk management, and risk finance, to create an African-owned disaster response system across the continent that enables African governments to better meet the needs of people at risk of disasters. ARC initially focuses on drought, with plans to expand to also cover other extreme weather events and disease outbreaks.
The evaluation has a ten year timescale (2015-2024) to allow for the study of developments in ARC as an organisation, the uptake of ARC products and services over time, and ultimately in the impact ARC is able to have on reducing vulnerability to disasters across Africa.
The frequency and severity of disasters globally, and drought in Africa specifically, is intensifying. Against this backdrop, African governments require support in their disaster risk planning and financing in order to ensure that timely support reaches affected populations before they have to engage in negative coping strategies, such as the sale of assets.
The African Risk Capacity was established in 2012 as a pan-African initiative. It is an African-owned, index-based weather risk insurance pool and early response mechanism that combines the concepts of early warning, disaster risk management, and risk finance. Through a pooled insurance model, ARC intends to offer African countries competitive pricing for insurance products. It should improve the ability of governments to better anticipate, plan, and respond to disaster risk by strengthening capacities, awareness, and action around DRM. And at the local level, the expected impact is that vulnerable households should be more resilient to disasters through the receipt of timely support.
Little is known about sovereign disaster insurance schemes. Our evaluation will support evidence gathering and lesson learning in this important, emerging area.
During the Inception Period, we will work with ARC Agency to construct a Theory of Change, on which the theory-based evaluation will be designed. There will be a formative phase and an impact phase to the evaluation.
Specific services which we provide include:
- A literature review of the scant resources and evidence on sovereign disaster risk insurance, to be updated regularly throughout the ten year evaluation period
- 12 country case studies to collect data from key informant interviews and focus group discussions, including some data collected at the household level using a Participatory Impact Assessment approach
- An organisational review of ARC Agency and ARC Ltd, updated at key points during the evaluation period
- A ‘global review’ including rollout of a perceptions survey to be completed by a range of stakeholders external to ARC operations and detailed interviews with global insurance industry experts
Depending on future membership of ARC, an additional workstream may be added to the evaluation, expected to be a quantitative household survey, based on an experimental design, as part of a rigorous impact assessment.
Data from the different workstreams will then be analysed using Contribution Analysis, and reported on, giving a clear indication of ARC’s contribution to improved disaster risk reduction across Africa.
In light of the scarce literature on disaster risk insurance mechanisms and impacts, our evaluation aims to make a significant contribution to global debates and policy on the topic, by offering robust empirical evidence collected from a range of African contexts.
The evaluation will test if risk pooling and transfer is a cost effective way to incentivise contingency planning and ensure rapid responses to drought and other extreme weather events. The evaluation will consider the value of support to contingency planning and early responses in minimiszing the impact of (and accelerating recovery from) extreme weather. It will consider where, when, why and how ARC is, or is not, effective with the aim of contributing to the global evidence base.
In addition, during the early formative phases of the evaluation, the team will identify and feed lessons learnt into the management of the ARC programme. This stage will be focused on considering and strengthening ARC’s effectiveness and performance.
Finally, the evaluation will also be instrumental in providing accountability to the UK taxpayer for DFID’s significant investment in ARC, demonstrating evidence to inform continued investment in the programme and similar investments for DFID and other donor agencies.