The National Insurance Commission (NIC) says they are alarmed at the amounts of money repatriated as reinsurance premiums annually.
According to the regulator, each year, the commission approves far in excess of US$10 million dollars to be transferred overseas which impact negatively on the Cedi on the local economy.
Justice Yaw Ofori, Commissioner of Insurance revealed that some of these premiums are in respect of services or covers that should have been able to build local capacity for, but for the lack of adequate level of innovation.
He therefore said as commissioner of insurance, he applauds the initiative of the board and management of Ghana Re to reward cedants. “I strongly believe that as cedants, you can do better, and therefore entreat you all to ensure that local capacity is fully utilized before any recourse to overseas reinsurance as stipulated in the Insurance Acts 724 of 2006.”
The commissioner therefore called cedants to resolve adequately to share risks among local companies and adhere to the provisions of the reinsurance guidelines to reduce premium flight and harness the needed resources to develop our industry to the extent where it plays a significant role in the country’s development.
Reinsurance is essentially for the effective management of risks, therefore, do not only help insurers diversify their underwriting portfolio and improve their financial capacity but also assist with the correct pricing of new products and to some extent, the estimation of anticipated losses, as a result of their access to adequate information and expertise in the appreciation of risks.
He pointed out that, the regulators are also aware that some troubled companies are trying to hide behind reinsurance as a way of covering up their inability to raise required capital from the financial market as well as their insolvency.
“As insurers we cannot continue the same skills and expect different result. We therefore need to go the extra mile by investing in the necessary tools for our trade such as a robust software, relevant and intensive staff training to develop skills, research and development to name a few. By these, we can improve our service delivery through adequate pricing and improvement in product benefits.”