By Mbatjiua Ngavirue Following successful negotiations, the insurance industry and the Namibian government on Friday signed the Second Market Agreement between the government, the Namibia Reinsurance Company and the Namibian Insurance Association. Finance Minister Saara Kuugongelwa-Amadhila presided over the signing of the agreement, as well as signing it on behalf of the Namibian government. The Namibian government decided in 1998 to create a local reinsurance business in the country as part of efforts to develop local capital markets and curb the outflow of domestic capital abroad. The government created the Namibia National Reinsurance Corporation, also known as Namib-Re, to further this objective. After protracted negotiations to overcome apprehensions in the insurance industry, the two parties succeeded in reconciling their views. This culminated in a five-year market agreement in 2001, in which the two parties made the following commitments: - The government would zero-rate the policy cession requirement in terms of Section 39(2) of the Namib-Re Act. - The Short-term insurance companies would offer up 20% of their reinsurance treaties (contracts) to Namib-Re; and - The Short-term insurance companies would offer Namib-Re the right of pre-emption in the acceptance of all facultative re-insurance business. Namib-Re commenced business based on this understanding in 2001. Kuugongelwa-Amadhila said that to date the company has underwritten insurance business valued at a combined insurance premium of N$151-million. "Such business deals grew the corporation's ability to manage reinsurance business, and should boost industry's confidence in the ability of Namib-Re to properly manage their insurance premiums and secure their insurance risks. "I am happy to note that during the past five years, I have not been made aware of any failure by Namib-Re to honour reinsurance claims," she noted approvingly. The parties agreed to extend the commitments under the first agreement for one year, while including the following amendments: - Short-term insurance companies with Namibian stand-alone reinsurance treaties shall cede to Namib-Re 20% of their reinsurance treaties; - Insurance companies without Namibia stand-alone reinsurance treaties would cede 7.5% of their net retained account. The extension takes effect retroactively to July 2006. Minister Kuugongelwa-Amadhila said that during the extension, stakeholders would investigate the possibility of establishing local stand-alone treaties for all short-term insurance companies. The aim will be to ensure that the policy cession rate will be uniform for all short-term insurance companies.
2007-03-07 00:00:00 11 years ago