African Risk Capacity Limited (ARC Ltd), Africa’s pioneering sovereign parametric development insurer, has announced a groundbreaking achievement with a record total payout of US$60 million in 2022.
This milestone marks the largest payout since the company’s establishment in 2014, underscoring the invaluable impact of its work in protecting African nations from the escalating risks associated with climate change.
In 2022, ARC Ltd. provided coverage to a staggering 18 million people living in countries susceptible to droughts and tropical cyclones.
Since its inception, the company has disbursed a total of US$125 million across eight risk pools, significantly improving the lives and livelihoods of at-risk communities throughout Africa.
Dr. Abdoulie Janneh, Chairman of the ARC Ltd. Board, emphasised that this remarkable accomplishment was only made possible through a collaborative effort with a network of supporters.
He stated, “Our donors and partners stood with us as we sought to protect the most vulnerable from climate change impacts in Africa. No one person or organisation can make the impact alone, and we are heartened that behind ARC Ltd. is a powerful and dedicated group of stakeholders who are fully committed to our success.”
ARC Ltd. continues to expand its reach, with the addition of Comoros and Somalia to its pool of member states. This expansion aligns with the company’s ambitious goal of covering 200 million people annually by 2025, solidifying its position as Africa’s leading institution for disaster risk financing.
Innovation and product diversification have played a pivotal role in achieving this goal. In 2022, ARC Ltd. introduced two new products: flood risk and outbreaks and epidemics (O&E).
Malawi and Togo successfully piloted flood risk coverage, while Uganda pioneered the O&E product, with Senegal becoming the first member state to adopt the O&E policy. Despite facing an increasingly challenging environment, ARC Ltd. has also made significant strides in expanding its non-sovereign and micro/meso insurance portfolio.
Lesley Ndlovu, CEO of ARC Ltd., highlighted the economic challenges faced by member states in an evolving global macroeconomic landscape.
He explained, “The global macroeconomic environment experienced a weakening trend, leading to diminished financial capabilities of our member states. This reduced their ability to afford insurance premiums, as national priorities, such as healthcare and education, competed for limited resources. The effect of these challenges was evident in 2022.”
Ndlovu stressed the vital role of donors and partners in making disaster risk insurance more accessible, emphasising that ARC Ltd. received support from the Swiss Agency for Development and Cooperation (SDC) in 2022 for the launch of the Outbreaks and Epidemics product, which included capital and premium contributions.