AFRICAN insurers’ lose about N1.78 billion ($5 million) annually in premiums transferred to reinsurance companies abroad.
According to a special report obtained by Financial Vanguard on confidential basis, and data from African Insurance Organisation (AIO), the losses are stated as 19.7 percent of their non-life business and 2.5 percent of their life policy businesses.
This translates to average annual transfer of N1.3 billion ($3.697million) for non-life and N479.88 million ($1.333million) for life to offshore markets. The just concluded 2018 conference and general assembly, the African Insurance Organization (AIO) identified the expatriation of premiums as a major inhibitor of growth in the African insurance market.
The regional insurance body noted the need for some transfer of premiums offshore in the conduct of insurance business as insurance relies on the concept of spreading risks. It however stressed that some of the transfer of premiums offshore is unnecessary where African underwriters are deprived of the opportunity to underwrite certain risks where local capacity exists.
Hence, the AIO frowned at unnecessary transfer of premiums offshore lamenting this can constrain growth if left unchecked.
The insurance regulatory body in Nigeria, the National Insurance Commission, NAICOM, has threatened stiff penalty against local companies that contravene local content policy by ceding businesses offshore without exhausting local capacities.