Reinsuring abroad hurt insurance industry – Prima Re

PRIMA Reinsurance (Prima Re) Company says uptake of insurance risks by local reinsurance companies remains low due to companies opting to reinsure abroad, impacting negatively on the growth of the insurance industry.
Prima Re managing director Exhilda Lumbwe said there is need for a law that will compel insurance companies to reinsure with local firms before insuring abroad.
Mrs Lumbwe bemoaned the current situation where local reinsurance companies only take up about 10 percent or less of all the risks.
“It is important to increase the premiums for the country to realise more revenue,” Ms Lumbwe said in an interview recently.
She said there is need to absorb the local capacity before reinsuring abroad and increasing premiums in those countries.
Currently, there are three reinsurance companies operating in the country namely; Prima Reinsurance Company, Zambia Reinsurance company and ZEP-RE (PTA Reinsurance Company).
She, however, said ZEP-RE is a regional organisation that promotes trade, development and integration within the Common Market for East and Southern Africa (COMESA) through trade of insurance and reinsurance business.
These companies provide insurance cover for insurance companies.
“We need a law that will ensure that reinsurance is done locally before reinsuring abroad so that local capacity can be filled. Some of the risks reinsured abroad are not necessary.
“For example, why would a vehicle be reinsured abroad? Surely the local insurance companies have the capacity to reinsure that,” she said.
Mrs Lumbwe said local reinsurance companies should be allowed to be given the opportunity to reinsurance risks locally and engage other reinsurance companies abroad if a risk is too big for local absorption.
“We buy insurance through other reinsurance companies if we do not have the capacity to absorb all the risks  because even the biggest reinsurance companies also buy reinsurance as the nature of the insurance is to spread the risks so that is why we are lobbying for insurance companies to reinsure locally before taking premiums abroad,” she said.

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