23.05.2005 Business & Finance

Insurance industry in Africa should compete globally - Kufuor

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Accra, May 23, GNA - President John Agyekum Kufuor on Monday stressed the need for the insurance industry in Africa to position itself strategically to service multinational companies that would emerge on the Continent.

He said these companies should not be allowed to depend entirely on foreign insurance companies for their insurance and re-insurance requirements.

"The insurance industry in Africa should encourage the formation of more re-insurance consortiums to underwrite the businesses of companies operating on the Continent to compete effectively on the global market", he said.

President Kufuor made the call in an address read on his behalf by Mr Joseph Kofi Adda, Minister of Manpower, Youth and Employment, at the opening of the 32nd Conference and General Assembly of the African Insurance Organization (AIO) in Accra.

The four-day conference, being attended by over 700 participants worldwide with majority of them from Africa is to provide a platform to brainstorm and provide solutions on the critical matters affecting the insurance industry in Africa.

The conference is under the theme: "Corporate Governance and the African Insurance Industry".

President Kufuor expressed concern about African countries that were still reinsuring the bulk of their strategic assets outside the Continent, which resulted in the flight of insurance premiums abroad. He told the participants that the urgency in the need for the African insurance industry to act globally should be appreciated in the context of the stricter terms and conditions that had emerged on the reinsurance markets outside Africa since the unfortunate events of September 11, 2001 in the United States.

President Kufuor said a reduction in the over-dependence on foreign companies would mean the retention of a sufficient portion of the African insurance and reinsurance business for the benefit of African companies.

"Further, it will lead to the conservation of hard earned foreign exchange, and also eliminate the difficulties experienced in seeking reinsurance protection outside the African markets", he noted. President Kufuor gave the assurance that the Government was systematically providing an enabling environment for all businesses, and had put together strategies that would assist the insurance sector in particular, to thrive.

These strategies, he said, were contained in the Financial Sector Strategic Plan, which was intended, among other things, to strengthen the supervisory capacity of the insurance regulatory authority - the National Insurance Commission (NIC)- to increase public confidence in the business of insurance.

The Plan also seeks to remove all forms of monopolies to enhance competition in the industry, remove restrictive investment requirements in the current Insurance Law to allow insurance companies match assets with liabilities, as well as improve the frequency of submission of returns from insurance companies to the NIC.

President Kufuor announced that a new Insurance Law would soon be passed to give more meaning to the vision of the Financial Sector Strategic Plan, to enable the industry to play a greater role in the nation's development, and to assume an important role in rebuilding Africa's economy.

He charged the participants to pay particular attention to individual roles in upholding good corporate governance in the financial sectors of their respective countries.

This, he said, would enhance the image of the industry and enable it to deliver full benefits to their economies.

President Kufuor reminded the participants of the crucial role played by the Private Sector of Africa's fledgling economies, calling on them to make the African insurance industry truly protective of policyholders, while also serving as a major source of investment capital needed to help propel development and growth on the Continent.

"The realization of Africa's dream of developing will inevitably be built on the achievements of organizations such as yours; and indeed, this is a noble course that you must pursue with all dedication and a high sense of professionalism. You have the privileged responsibility to help to transform Africa. Make us proud of you."

Nana Agyei Duku, Vice President of the AIO, who welcomed the participants, noted that the insurance industry was a key player in the international arena, hence its operations called for collaboration, as the world became a global village.

He said as a stakeholder in development, there was the need for the insurance industry on the Continent to strategise in order to enhance respective country's socio-economic dynamics and maintain its relevance in the global economy. 23 May 05

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