Africa Specialty Risk: Insurance solutions to encourage Nature based Solutions investments in Africa

As climate risks intensify across Africa, Nature-based Solutions (NbS) are gaining attention as tools for climate mitigation and adaptation. Yet, their exposure to climate and political uncertainty raises important questions for insurers. This study examines whether insuring carbon-linked NbS could represent a relevant and credible business opportunity for ASR, while supporting the development of internal expertise in an emerging field. It focuses on mangroves, forests, and agricultural landscapes, combining market scoping, risk identification, and a cost-benefit analysis to explore how climate and political risks shape the insurability of these projects. The final results of our study shows that revenue potential for insurers are limited in the short term, but expanding market coverage and maturing pricing conditions enable revenues to surpass commercial viability thresholds over time. Beyond market sizing, the analysis contributes to broader reflection on how insurers can engage with NbS and play a role in the evolution of sustainable finance ecosystems.

The Business Case for insuring Nature based Solutions in Africa: Market potential and strategic entry pathways for insurers

Nature-based Solutions (NbS) are increasingly recognized as cost-effective tools for climate mitigation and adaptation in Africa, yet their large-scale deployment remains constrained by financing and risk-management gaps. This study assesses whether a viable insurance market for NbS can emerge in Africa and under what conditions, by combining project-level market sizing, scenario-based revenue projections, and insights from practitioners across insurance, development finance, and NbS implementation sectors.

Focusing on “green” NbS projects linked to voluntary carbon markets, the analysis identifies mangroves, forests, and agricultural landscapes as the most relevant natural assets for insurance assessment. Results show that Africa hosts substantial NbS-related natural and carbon value, with an estimated insurable market size of approximately USD 323 million in 2025, dominated by forest-based projects. Scenario projections to 2030 and 2035 indicate gradual market growth likely under conservative and most realistic assumptions, reflecting persistent constraints related to governance quality, carbon-market maturity, and project structuring.

However, only a small share of this value (5 to 10%) is realistically insurable today, as many NbS projects lack stable revenues, robust monitoring systems, or are being developed in politically fragile contexts. Two insurance products nonetheless emerge as the most relevant entry points: climate-index insurance, addressing climate and permanence risks affecting carbon revenues, and political-risk insurance, protecting project continuity and asset ownership in fragile governance environments. Current revenue potential remains limited, at around USD 0,25 M for climate-index insurance and USD 0,43 M for political-risk insurance in 2025, but both products exceed the USD 1 million revenue threshold around 2032 under the most realistic scenario.

These findings suggest that immediate full-scale market entry is premature, but early engagement is strategically justified. The report recommends a phased entry strategy for ASR, starting with partial resource allocation to build underwriting capabilities, develop project-screening frameworks, and pilot products selectively in favorable contexts. Scaling to a dedicated full-time function should be conditional on improved market maturity, clearer project pipelines, and reassessment around 2030. By adopting this approach, ASR can remain positioned in an emerging market while playing an enabling role as NbS finance and insurance ecosystems mature.

Students: Omar Abbassi, Clara Bottinelli, Fang-Hsuan Cheng

Company’s supervisor: Massimo Poretti from Africa Specialty Risks

Academic supervisors: Sylvain Coutu

Transformative Projects’ Lead: Samuel Wicki