Short Term Insurance Re-looks Agreement

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By Wezi Tjaronda WINDHOEK Stakeholders in the short-term insurance industry this week met to review the Short Term Insurance Market Agreement, which ends in July this year. The Minister of Finance, the Namibia Insurance Association (NIA) and the Nami-bia Reinsurance Corporation (NamRe) entered into a Short Term Insurance Market Agreement in July 2001 after the insurance industry challenged the constitutionality of the establishment of NamRe. The industry went to court after NamRe was gazetted on July 1, 1999, a case which was ruled in favour of NamRe. The corporation was established to carry out reinsurance business and to conduct all affairs relating to sound insurance practices and methods, to promote development and participation of Namibians in the insurance and reinsurance industry and also to create, develop and sustain local retention capacity in insurance and reinsurance business to minimise the placement of insurance and reinsurance business outside the country. The Short Term Insurance Market Agreement provides for putting a percentage value of each policy issued or renewed in Namibia by the registered insurer and registered re-insurer after the commencement of the Act at zero percent from an initial percentage of 25 percent. It was also agreed that the cessation of all insurance contracts remain at 20 percent and that NamRe would ensure all reinsurance business first. The Namibia National Reinsurance Act of 1998 provides that all registered insurers and re-insurers cede a percentage value of each policy issued or renewed in Namibia by the registered insurer or re-insurer after the commencement of the Act, which the Minister had put at 25 percent. It also provides that all registered insurers and re-insurers cede a 20 percent value of each re insurance contract placed by registered insurers and re insurers with any re-insurer after the commencement of he act. According to the Act, all facultative reinsurance business from registered insurers and re insurers would have to be first offered to NamRe before being offered to other insurers and re-insurers. Realising that the deadline to the end of the agreement is closing in, the stakeholders met this week to review the agreement and lay the ground for its renewal, according to NamRe Reinsurance Manager, I. Ben Nashandi. During the five years of the agreement, the insurance industry and NamRe have been beneficiaries under the agreement, said Minister of Finance, Saara Kuugongelwa- Amadhila when she addressed the meeting. She said successes achieved under the agreement indicated that immense possibilities exist in the industry, which with commitment and cooperation among stakeholders would bring about real opportunities. She however said that reviewing the market agreement should present a chance for the industry to take a critical yet an objective look at the cooperation among the stakeholders over the past five years, by building on the successes working on the problem areas. Apart from this, Kuugon-gelwa -Amadhila also said NamRe had succeeded to establish itself as a reputable reinsurance business capable of managing the business placed with the industry and also contributed to the deepening of financial intermediation and the development of financial markets, a situation which supports investment and economic growth. The development of local financial markets is not only important for mobilising domestic savings but also to ensure efficient allocation of such savings. “In the case of Namibia, the financial markets must support the nation’s efforts to create an investment home for the abundant savings we have succeeded to build up and reverse their export to foreign nations,” she added. Another success of NamRe is that the insurance industry is able to manage its insurance risks, thus ensuring that reinsurance claims remain within the limits of what is normal according to industry norms.