Global Shield backs parametric regional risk pools to enhance cooperation

The four major parametric disaster risk pools—ARC (Africa), CCRIF (Caribbean), PCRIC (Pacific), and SEADRIF (Southeast Asia)—have signed a €4.7 million grant agreement with the Global Shield Solutions Platform (GSSP). This funding aims to strengthen and expand their collaboration, potentially transforming how they access reinsurance and capital markets.

This follows a 2023 Memorandum of Understanding between the pools to explore a joint reinsurance facility that would enhance risk transfer efficiency and unlock broader access to private capital. Collectively known as the Sovereign Risk Pools, these regional insurance entities support nearly 100 countries in building climate and disaster risk resilience through parametric insurance solutions.

The grant is seen as a key milestone in deepening cooperation among the pools, aligning with GSSP’s broader goals of fostering financial resilience and sustainable development. A study commissioned by GSSP and conducted by WTW identified actionable strategies for improving the pools’ integration with private capital and reinsurance markets—most notably, through the gradual development of a global facility that could scale and diversify risk exposure.

Dr. Annette Detken, Head of GSSP, highlighted the importance of this initiative, especially amid growing fiscal and political challenges around climate finance. She emphasized that the risk pools have proven to be effective models for disaster risk financing and that enhanced collaboration is vital for further progress.

Leaders of the four risk pools echoed this sentiment:

• Lesley Ndlovu (ARC Ltd.) called the grant a transformative step toward practical, collective solutions that increase Africa’s climate resilience.
• Isaac Anthony (CCRIF SPC) described the agreement as a pivotal evolution in delivering development insurance and closing the protection gap in the Caribbean and Central America.
• Aholotu Palu (PCRIC) noted that this partnership affirms the Pacific’s global role in disaster risk finance, accelerating tailored regional solutions.
• Benedikt Signer (SEADRIF) said the funding will support capacity building, tested solution deployment, and stronger advocacy across ASEAN.

As these pools seek to expand and improve their offerings, access to efficient and affordable risk capital remains crucial. Diversifying reinsurance sources—including the use of catastrophe bonds and insurance-linked securities (ILS)—is a key strategy. Some pools have already tested such instruments, with CCRIF issuing a private cat bond via the World Bank and ARC previously partnering with ILS funds like Nephila Capital.

By scaling collectively and leveraging diversified capital sources, these risk pools aim to deliver greater value and resilience to vulnerable countries and communities worldwide.