NDF provides lead capacity for WFP’s parametric Sahel Climate Catastrophe Layer

The Natural Disaster Fund (NDF), a public-private partnership funded by UK and German governmental entities and managed by Global Parametrics, part of the CelsiusPro Group, was the lead provider of risk capacity to the recently placed parametric Sahel Climate Catastrophe Layer that supports the UN World Food Programme (WFP).

As we reported earlier this week, reinsurance broker Gallagher Re and parametric specialist insurer African Risk Capacity Ltd (ARC Ltd) structured and placed a parametric reinsurance solution to provide responsive financial protection to the UN World Food Programme’s (WFP) operations in the Sahel region.

The responsive protection is designed to provide a timely financial response to populations affected by drought and food insecurity in the Sahel region of Africa, through support to the UN’s WFP operations in the region.

The parametric risk transfer structure allows for payouts of up to $30 million dollars to be triggered rapidly when drought conditions occur, disbursing the financing to WFP country offices in Niger, Mali and Burkina Faso to aid in their work to help in the response and recovery efforts.

CelsiusPro has now announced that the Natural Disaster Fund (NDF), managed by Global Parametrics, supported African Risk Capacity Ltd. (ARC) with risk capacity for the UN World Food Program parametric arrangement.

“As the lead provider of risk capacity for the Sahel Climate Catastrophe Layer (SCCL), the NDF plays a pivotal role in ensuring that payouts are swiftly released during severe drought events that breach a predetermined index value,” CelsiusPro explained.

While funded by UK and German governments, the NDF also shares its risks with global reinsurance firm Hannover Re.

CelsiusPro also highlighted that the risk capacity for this parametric arrangement can support drought resilience and recovery for many people.

“The WFP, governments, and partners are embarking on the second phase of the Sahel Integrated Resilience Programme. The scale-up plan aims to reach 5 million people. The NDF risk capacity transaction provides coverage for up to 1 million WFP beneficiaries,” the company explained.

CelsiusPro added, “We are grateful for the trust placed in the NDF and Global Parametrics as this transaction brokered by Gallagher Re demonstrates how parametric climate insurance can contribute to building resilience as well as delivering humanitarian relief for communities facing climate-driven crises.”