BY ROSEMARY ONUOHA
Nigerian insurance market leaders have continued to serve as fronts for international insurers, a report by A.M Best Company has revealed.
According to the report, the maximum amount of individual risks that Nigerian insurers are prepared to retain tends to be between USD 5 million and USD 10 million which is relatively low by international standards.
The report said ?In Nigeria, for example, market leaders Custodian and Allied Insurance and Leadway Assurance Co. have total Gross Premiums Written (GPW) of less than USD 110.5 million. Other non-life insurers underwrite GPW markedly below this level. The maximum amount of individual risk that insurers, including Custodian and Leadway, typically are prepared to retain tends to be between USD 5 million and USD 10 million ? relatively low by international standards.?
?Custodian and Allied Insurance?s retention level in 2010 was 40.35 per cent. Considering the scale of corporate risks such as oil and energy projects in the region, and the desire for additional expertise, Nigerian insurers tend to act as fronting companies, retaining less than five per cent of each risk.?
Nigeria?s insurance regulator, the National Insurance Commission (NAICOM), and the Nigerian Oil & Gas Industry Content Development Act of 2010 are encouraging increased domestic retentions for energy risks. However, given the high values of these risks, insurers cannot retain significantly greater levels, the report stated.
According to the report, insurers operating within Africa rely heavily on reinsurance in particular for corporate risks, although some regulators are encouraging higher retention ratios.
The report stated thus ?As in other emerging insurance markets, such as those in the Middle East, insurers in Africa commonly act as fronting vehicles, ceding the majority of risks. African insurers rely on local, regional and international reinsurers.
Regional reinsurers include Africa Re and ZEP-RE. Some African countries have a national reinsurer, including Morocco (Societe Centrale de Reassurance ? SCR), Algeria (Compagnie Centrale de Reassurance), Kenya (Kenya Re), Tunisia (Societe Tunisienne de Reassurance) and Ghana (Ghana Reinsurance Co.).?
In some countries, according to the report, national reinsurers benefit from compulsory cessions, although to some extent these are being phased out in the region. Subsequently, reinsurers are attempting to expand their portfolios internationally.
For example, Ghana Re, which is wholly owned by the Ghanaian government, saw its market share fall from 92 per cent in 2008 to 86 per cent in 2010 following the repeal of its compulsory legal cessions in 2008. Before 2008, Ghanaian cedants were obligated to cede 20 per cent of all treaty business to Ghana Re, the report said.
According to the report, despite compulsory cessions being removed in some African countries, reliance on reinsurance for corporate risks in the region remains high.
Comments are moderated. Please keep them clean and brief.
safety not guaranteed lifehouse al gore la dodgers lawrence o donnell magic johnson jetblue pilot
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.