- African Risk Capacity (ARC) Limited’s integrated annual report shows high impact despite a challenging year for insurance.
A record total payout of US$60 million in 2022 is among the highlights detailed in ARC Ltd.’s integrated annual report, together with significant strides in innovation to safeguard African nations from the increasing risks associated with climate change.
The payout was the largest since the company’s inception in 2014, underpinning the value of the company’s work as Africa’s first sovereign parametric development insurer. In 2022, ARC Ltd. covered 18 million people in countries prone to drought and tropical cyclones. Since 2014, the company has paid out US$125 million across eight risk pools, making a significant difference to the lives and livelihoods of at-risk communities.
Chairman of the ARC Ltd. Board, Dr Abdoulie Janneh points out that this accomplishment was made possible due to a network of support: “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. Together, we faced unprecedented challenges, but also achieved significant milestones.”
These milestones include Comoros and Somalia joining the pool as ARC Ltd. focuses on expanding its member states, thereby covering more people. It has set the ambitious target of covering 200 million people annually by 2025 and positioning itself as the continent’s leading institution for disaster risk financing.
Innovation and product diversification are central to this and 2022 saw the launch of two new products: flood risk, and outbreaks and epidemics (O&E). Malawi and Togo piloted flood risk, while Uganda piloted O&E, with Senegal becoming the first member state to sign up for the O&E policy. Despite an increasingly difficult environment, ARC Ltd. also made strides in expanding its non-sovereign and micro/meso insurance portfolio.
Explains ARC Ltd. CEO Lesley Ndlovu: “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 says it is only with the assistance of donors and partners that disaster risk insurance can be made more accessible. In 2022, ARC Ltd. was supported by the Swiss Agency for Development and Cooperation (SDC) for the launch of the Outbreaks and Epidemics product through capital and premium contributions.
A leader in ESG
In terms of company successes, the annual report highlights ARC Ltd. receiving the global insurance industry’s top environmental, social and governance (ESG) score, following an evaluation by ESG research, ratings and data company, Sustainalytics. ARC Ltd. moved from low risk to negligible risk, improving by two positions, and at 5.7, its ESG risk rating is the lowest among its global peers.
ARC Ltd. also leads in the Diversified Insurance sector, with the lowest exposure among its peers (24.0) and the strongest management score (80.3). It also scored negligible risk ratings for data privacy and security, corporate governance, human capital, business ethics and ESG integration.
Looking ahead at goals for 2023, Ndlovu says ARC Ltd. remains focused on new products and tailoring solutions for individual countries to meet their needs. The company also wants to expand its Replica programme by partnering with more humanitarian organisations and launching the programme in additional countries.
“The urgency for disaster risk insurance has never been greater, given the escalating frequency and intensity of perils, but with the support of our stakeholders and the collective efforts of our exceptional team, we are poised to continue making meaningful strides in the fight against climate change,” concludes Ndlovu.
To view ARC Ltd.’s 2023 integrated annual report go to https://bit.ly/467RiFg