In recent weeks, Chad became the latest country to declare a food emergency as several African nations battle against one of the worst climate-induced emergencies on record. With the devastating effects of climate change already reverberating throughout the continent, Africa’s need to develop resilient structures is as urgent as ever.

Having critical climate data for Africa will be key to achieving this—yet the lack of available data is a major factor in the continent’s difficult struggle against climate change. As recently emphasized by Sudanese billionaire Mo Ibrahim, weather stations across Africa are sparse and unevenly distributed, leaving “critical gaps” in Africa’s climate data. “We don’t have a voice [in] global climate discussions as we lack strong research capabilities,” explains Ibrahim.

Climate-related research and early warning systems are crucial in choosing the right approach to developing resilience and mitigation measures. Without reliable data, authorities are ill-equipped to plan for extreme weather situations and mitigate the impact of these events on human life. As a result, warns the UN, daily life in Africa could soon become a catastrophic struggle to survive.

Data for future

According to new data from the UN Intergovernmental Panel on Climate Change (IPCC), children born today are set to experience four times more climate extremes in their lifetimes than current global populations. If temperatures increase two more degrees Celsius, as they are expected to do by the end of this century, they will have to endure five times the floods, storms, drought and heat waves.

There is, however, some good news: despite underinvestment, some of Africa’s climate adaptation efforts are slowly taking shape. Renewable energy is the main source of power for 22 countries on the continent, and pilot projects are already working to bolster Africa’s climate resilience. With expanded funding, renewables could make up half of the energy mix by 2030.

But to make climate adaptation efficient and effective in the long-term, more accurate data samples are required. As it turns out, insurance companies could make all the difference in this endeavour. Indeed, insurance presents a potential catalyst for the use of climate risk information to underpin wider decision-making and adaptation action. According to research by the Future Climate For Africa programme, the intersection of the insurance industry and actors seeking to mitigate the impacts of climate change, such as farmers, businesses and governments, have revealed new opportunities for Africa’s climate resilience.

Insurance sector increasingly important as climate risk rises

According to estimates, some 66% of all economic losses from natural disasters over the past decade have not been insured. Of the $2 billion loss for Mozambique, Malawi and Zimbabwe resulting from Cyclone Idai, for example, only 7% was covered by insurance. With extreme weather events predicted to only increase in frequency, authorities would be remiss to overlook the role of the insurance industry in mitigation and rebuilding efforts.

Indeed, closing the insurance protection gap in Africa is a major priority—especially since insurers play a vital role in facilitating the flow of capital to climate mitigation projects, providing de-risking solutions to investors, as well as dispensing important risk and policy expertise in the first place. In East Africa’s geothermal energy sector, for example, de-risking solutions formulated by insurance underwriters have proved vital in attracting the necessary global investors to the region’s energy transition.

Will industry consolidation benefit Africa?

In fact, there is already a larger trend in the insurance industry that is seeing several companies pivot towards climate-related products, with the sector’s potential in the fight against climate change – and in reducing the burden on humanitarian services – becoming increasingly obvious. However, insurers at the local and regional level are only the tip of the iceberg of this expanding industry. Reinsurers, who cover primary insurers’ losses, are becoming ever more important for underwriting large-scale climate mitigation projects, in addition to smaller insurance companies operating in Africa.

For instance, global reinsurer Swiss Re is a major backer of the Kenya Livestock Insurance Programme (KLIP). In 2018, the programme was praised for delivering pay-outs to tens of thousands of smallholder farmers when their livestock died during drought. Today, Swiss Re is set on expanding into Nigeria, where rising sea levels threaten both high-value real estate and city slums.

Not only are reinsurers providing a more robust safety net against the risks posed by climate change, but they are becoming better at anticipating them. French mutual insurer giant Covéa, for example, has started integrating advanced spatial data analysis techniques in their risk modelling, enabling them to better predict how adverse climate events may impact specific areas. Covéa, which recently acquired major reinsurer PartnerRe for roughly €8 billion, is however not the only big player that is continuing to innovate and grow. Indeed, according to the Global Reinsurance Market report released a few months ago, the entire re-insurance industry is projected to grow by $328 billion in the next four-year period.

While the threat of climate change looms large, more precise risk modelling can help mitigate its effects. Emerging technical innovations and data-driven insurance approaches are finally closing the data gap that has, thus far, kept Africa on the backfoot in its climate mitigation efforts.