NamibRe weathers insurance’s economic storm
THE Namibia National Reinsurance Corporation (NamibRe) is a state-owned enterprise established under the Namibia National Reinsurance Act, 1998 (Act 22 of 1998), to perform the following:
carry on reinsurance business and to conduct all affairs relating thereto in accordance with sound insurance practices and methods;
promote the development of, and the participation of the people of Namibia in, the insurance and reinsurance industry in Namibia;
provide reinsurance cover of international standards to insurance markets, whether within or outside Namibia; and
create, develop and sustain local retention capacity in insurance and reinsurance business and to minimize the placement of insurance and reinsurance business outside Namibia.
In pursuit of the above-mentioned, the corporation started to underwrite reinsurance risks first in July 2001 following its formation.
From N$5.5 million at end of March 2001, the gross premium income (gross turnover) grew to N$97 million at end of March 2010, a sure sign that the corporation managed to ward off much pressure from the economic meltdown whose effects severely paralysed the insurance world.
Such a growth was systematic over years, mainly generated from underwriting reinsurance risks in the Namibian market.
Reinsurance in itself is a secondary function in the insurance chain.
Whilst insurance companies provide insurance covers to individuals and businesses to protect their assets and themselves against anticipated unforeseen perils or dangers; the function of reinsurance involves providing the same protection to insurance companies. Reinsurance is therefore an insurance for insurance companies.
Three basic reasons exist why insurance companies need to reinsure further. In essence, reinsurance plays vital roles in the insurance industry, which include:
• Providing capacity to insurance companies: This is necessary to insurance companies when they are unable, due to the size and nature of risks, to keep the whole of the insured value for their own account. This scenario occurs when large risks with high sums insured are underwritten. With reinsurance, the insurer could write the risk and reinsure a portion or whole and only keep what its financial position could support.
• Creating stability to insurance companies: fluctuations and swings in the results are caused by very large and sud...
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