Government re-looks at another National Reinsurance Company after ZHL exit
By Insurance24
HARARE, Government is re-looking at the creation of and supporting a National Reinsurance Company with a legal cession status as in other regional countries but insurance companies are still expected to play a developmental role in communities they operate.
Cession refers to the portions of the obligations in an insurance company’s policy portfolio that are transferred to a reinsurer.
Here risk can be transferred to the reinsurer a proportional or non-proportional way. Ceding a portion of risk to a reinsurer allows an insurance company to more effectively and efficiently manages its overall risk exposure.
African countries like Egypt, Tunisia, Ethiopia Kenya Tanzania and Uganda have managed to create national reinsurance companies with legal cessions.
In Zimbabwe government facilitated the growth of Zimre reinsurance in 1983 through the provisions of legal cessions in Zimre Act.
At a Baobab Reinsurance Rebranding celebrations on Friday, Minister Of Industry and Commerce, in a speech read on his behalf said it is with this hindsight the that the government is reconsidering.
“With hindsight the government is having a relook at the creation of and supporting a national reinsurance company with a legal cessions status like what has been happening in other African
countries such as Egypt (Egypt (Re) Ethiopia (Ethiopia(Re) ….In developing economies ,the case for government supporting the building of strong institutions which speared economic growth and
an national development is now fashionable,” he said.
Bimha said insurance companies are expected to play a developmental role by addressing issues of employment creation, poverty alleviation, needs of informal and rural sectors and generally be responsive to the needs of the communities in which they operate.
As the economy will grow at accelerated rates envisaged ,there is an inevitable need for additional insurance capacity to support the growth of key sectors of agriculture mining ,tourism, manufacturing and construction and infrastructure development.
“The Zimbabwe insurance industry also needs to be positioned to deal with new challenges arising from the spectre of global warming , terrorism and economic and social effects of diseases such as the Ebola virus. The industry therefore needs to constantly transform and be innovative in order to respond to the emerging challenges effectively,” he said.
While insurance penetration ratios in Zimbabwe and the rest of Africa, Bimha said this presented vast opportunities for the growth of the industry, given the projected robust economic growth which should
result in a growing middle class.
