More than 75 percent of African reinsurance market share is placed outside the continent, Group Managing Director, Africa Reinsurance Corporation, Cornellie Karekezi, has said.
He, however, listed lack of skills and capacity, low capital base and unhealthy competition as the problems hindering the growth of the African reinsurance market.
He made this known at a briefing on the corporation’s new logo.
He said stopping capital flight of insurance premium in the continent was tough.
He noted that the mission of Africa Re is to foster insurance development by supporting, assisting and working with national insurance markets in the African Continent.
He said: “When Africa Re was created as an initiative of the African Development Bank, following an agreement with member-states of the Organisation of African Unity (OAU), the idea was to bring together all states on the continent, provide capacity which was very rare at that time, bring capital and start doing what was being done by foreigners only.
“At present, as an organisation, we have 10 per cent of the total reinsurance market share in Africa and if you combine capacities of all the other reinsurance companies, we may not do up to 25 per cent. We have tried our best, but we still have a long way to go,’’ he said, adding that there is lack of capacity to cover large risks like oil and energy, lack of capacity to cover mega projects and even special risks like airlines and aviation.
The Africa Re boss pointed out that the continent is competing on not only capacities, but also ratings, adding that African solidarity had not grown much to support the continent’s development.
“For us at Africa Re, we go through rigorous risk management initiatives so that we can be compared with other European companies. Sometimes you are refused to lead a treaty even though you might have the competence and the capacity because of some kinds of ratings. That explains why we have not retained the entire businesses emanating from the continent.
He said most markets in the continent have very low capital base, and that this is undermining capacity to undertake big ticket risks. ‘’Except for eountries like Nigeria that has reasonably large capital, many of the other countries have very low capital requirement and this accounts for why a lot of the businesses emanating from the continent go offshore, he added.
“Retention is largely driven by capital base, succession is high. Another major challenge is unhealthy competition, which is also affecting growth in most of the market. But Africa Re has continued to engage the market and the chief executive officers across the African market by organising trainings in all areas of the business for skills development as well as setting standard,’’ he said.
