Lack of capacity to retain risks in the continent by African insurance and reinsurance companies account for the huge premium flight recorded annually
Insurance Companies have expressed concern over huge premium flight out of Nigeria and other African countries to the West as this undermine their capacity to retain risks and grow the sector. The Managing Director of African Reinsurance Corporation (Africa Re), Corneille Karekezi, said this while speaking with journalists on the sideline of the 42nd African Insurance Organisation (AIO) Conference in Tunisia recently.
Karekezi lamented that such lack of capacity by African insurance and reinsurance companies account for the huge premium flight out of Africa every year. According to him, African solidarity has not gone very far to support its reinsurance business in the continent. His said “We have problem of skills in specific classes of insurance business in the continent. This is in addition to low capital requirement in many countries, except for few cases like Nigeria. The very low capital requirement is one of the reasons why many businesses still go out of Africa, just as unhealthy competition remains a challenge as well.”
He further added that his company still does not have a big appetite to write businesses outside Africa. “We still want to remain strong in Africa because we understand the terrain. The international business is very challenging and requires huge capital outlay. We don’t have huge capacity to write businesses outside of Africa on a large scale.” On the African Aviation Pool, he said: “The African Aviation Pool is not in good shape because of two issues: Over-supply of capacity in the world pushing rates down and so many plane crashes bringing losses to operators. The aviation business is not good in the African continent.
However, Karekezi said that the first African Insurance Awards instituted by Africa Re is part of the company’s commitment to the growth and development of the continent and therefore assured that the company will continue to pursue initiatives to spur professionalism and excellence in the insurance industry. During the award ceremony in Tunisia, Misr Insurance Co. of Egypt was named the Insurance Company of the Year; Mutual Benefits Assurance of Nigeria won the Innovation Award of the Year, while the CEO of the Year Award went to Patrick Tumbo, CEO and Principal Officer of Jubilee Insurance of Kenya.