A year of impact & value – a record US$60m in payouts
2022 was the year in which ARC Ltd. intentionally set out to demonstrate value, impact and meaning on the African continent. Already in Q1, our mission to be impactful was evident with the highest payout in our history – $10.7m to the Madagascar Government, following the devastation of Tropical Cyclone Batsirai, which made landfall on 5 February. It claimed the lives of 121 people and displaced more than 61 500. The rapid payout ensured an early response, supporting the government’s emergency relief and recovery efforts in the country. Additionally, Madagascar had been impacted by food and water shortages and water-borne diseases.
By the end of 2022, we had succeeded in our intention with a record disbursement of $60m for 14 payouts – the highest amount we have ever paid out in a single year. The 2022 payouts went to:
- Burkina Faso: $1.19m for drought
This payout helped the country combat hunger and malnutrition after the drought had affected crops and harvesting.
- Madagascar: $797,049 for drought and $10.7m for tropical cyclone
Not only did Madagascar have to contend with a series of cyclones and storms in early 2022, culminating in Tropical Cyclone Batsirai, but the southern region was impacted by the worst drought in decades with an estimated 30 million people facing food insecurity. This triggered the second payout in the second quarter.
- Mali: $7.1m for drought
As an agricultural country with most adults involved in subsistence farming, Mali was hard-hit by drought. The country received its first-ever payout in March 2022, allowing as many as 204 000 vulnerable people to access food aid.
- Mauritania: $1.14m for drought
A prolonged drought in Mauritania, which also depends heavily on agriculture, destroyed harvests, caused a shortage of grazing pastures and resulted in livestock starving to death. The payout made provision for much-needed food aid.
- Malawi: $14.2m for drought
Malawi experienced the driest-ever agricultural season, some staple foods became depleted, and food prices soared to accommodate transport costs. The payout ensured the provision of food assistance or cash transfers to vulnerable communities impacted by the drought.
- Zambia: $5.3m for drought
Zambia experienced an extreme drought event in the 2021/2022 agricultural season. The payout assisted the country with rapid emergency response activities in affected communities, including the provision of cash transfers and food assistance to vulnerable households during the lean season period.
Since its inception in 2014, ARC Ltd. has paid out a total of $125m in claims from eight risk pools. Currently, we cover more than 18 million people in Africa and although the need is far greater, our mission, to reiterate, is to cover 200 million by 2025. This significant impact of 2022 will now also be extended in 2023 due to the addition of two new perils – flood risk and outbreaks and epidemics.
Delivering value
We measure our impact by evaluating how effectively we have served the needs of vulnerable populations in our member states. ARC Ltd.’s gross payouts are derived from actual rainfall estimates from the beginning of the season to the latest dekadal (10-day) precipitation observed. We apply previously observed rainfall data from 2001, which is then used to create estimates of drought response costs and payouts. We also aim to strengthen the commercial capacity of insurance markets in Africa through our micro/meso product.