NIC Improves Insurers' Capacity For Big-ticket Risks

National Insurance Commission, (NIC) has given the green light to a new reinsurance brokerage firm, Afro-Asian Reinsurance Brokers (Gh) Ltd, to operate in Ghana.

The move is to provide expertise to insurance companies which seek to share their big-ticket risks, especially in oil, gas and aviation.

According to the Commissioner of Insurance, Justice Yaw Ofori, the entry of Afro-Asian Reinsurance brokerage firm onto the Ghanaian insurance market will minimize premium flight which results from seeking reinsurance advisory services from foreign reinsurance brokers.

He said, “We still send a lot of businesses out of the country, but we have fewer reinsurance companies on the market.

We don’t have the technical expertise when it comes to reinsurance brokers, currently we have only one reinsurance broker until Afro-Asian came in with their big businesses like oil and gas and marine insurance where we don’t have the expertise,” he said.

Mr Ofori, “we do aviation insurance but we don’t have the expertise so most of these businesses are underwritten from outside and we just take their policy wording and just sometimes front for them.

But if we have a local entity that has the expertise, then it means that our local insurance companies can also take a bit of the risk and that helps them to grow their capacity,” he added.

Also known as insurance for insurance companies, reinsurance is the practice of insurers transferring portions of their risk portfolios to other parties by some form of agreement to reduce the likelihood of paying a large obligation resulting from an insurance claim.

Currently, there are four reinsurance companies - Ghana Reinsurance, WAICA Reinsurance, GN Reinsurance and Mainstream Reinsurance. Meanwhile, there exists only a reinsurance brokerage firm in the country (KEK Reinsurance Brokers Africa) – a situation that does not augur well for the insurance sector of the economy.

On his part, Managing Director of Afro-Asian Services, UK, Udai Patel, says his outfit is bringing onboard expertise to improve reinsurance awareness.

Reinsurance broker
A reinsurance broker is a person who acts as an intermediary between an insurance company and a reinsurance company.

This person or company’s job is to acquire reinsurance for the insurance company. This can involve negotiating rates and be finding the best policies for riskier businesses.

Benefits
Reinsurance brokerage facilitates underwriting of big-ticket transactions and also provides a platform that supports local players, instead of moving big insurance transactions outside the country.

The expectation is hinged on the firm belief that it would result in industry-wide consolidation through human capital development that would further position the sector to realize its potential.

This will also strengthen industry capacity for risks especially in engineering and construction n sectors of the economy.