WINDHOEK – The battle for revenues worth over N$1 billion a year commenced yesterday in the High Court, where Treasury and state-owned reinsurance company NamibRe want the court to compel eight insurance companies to reinsure part of their premium gains within the borders of Namibia.
The eight companies, with the exception of Trustco Life Limited, are of South African origin.
They are Hollard Insurance Company of Namibia Limited, Hollard Life Namibia Limited, Sanlam Namibia Limited, Santam Namibia Limited, Trustco Insurance Limited, Trustco Life Limited, Outsurance Insurance Company of Namibia Limited, Old Mutual Life Assurance Company Namibia Limited
NamibRe (Namibia National Reinsurance Corporation) is Namibia’s only reinsurance company.
The company, backed by the Ministry of Finance, wants the court to compel the insurance companies to adhere to a new regulation that asks for a higher percentage of insurance premiums to be re-insured in the country through NamibRe.
In addition, Treasury and NamibRe are asking the court to authorise them to institute criminal proceedings against the CEOs of the sued insurance companies should they be successful in their application and the companies do not comply.
The proceedings only started yesterday through an urgent application in the Windhoek High Court before Judge Thomas Masuku and would continues today.
It has been a long drawn fight since insurance companies lodged a court application to halt a newly promulgated law that requires that all insurance companies within Namibia place at least 18 percent of their monthly premiums with NamibRe.
The law also requires that nearly 20 percent of the risk premiums to be placed under re-insurances companies must be placed, or ceded, with NamibRe, before the risks portfolio is insured with foreign reinsurance companies.
The law was promulgated on 29 December 2017, and insurance companies were given 180 days to comply. But immediately the eight insurance giants, who essentially make up what is Namibia’s insurance industry, dug in their heels, and approached the court to have the law set aside and revisited.
Companies did this after dissecting the schedules published in the law regarding what they should pay. The insurance companies also said they found myriads of problems, especially with the broadened constitutional powers of NamibRe.
The new regulations, for instance, ask that all insurance companies submit detailed sheets of their monthly premiums, claims paid, total sums issued, statements of accounts, risk being insured or reinsured and commission payables on each insurance contract.
The reason is that NamibRe wants to use the information to be able to hold each insurance company accountable on the money being paid out as commissions and premiums to foreign reinsurance companies.
NamibRe would then determine whether or not it is not being short changed by insurance companies who would rather deal with their long established foreign partners instead of dealing with Namibia’s state-own reinsurance company.
Finance Minister Calle Schlettwein told the court yesterday that the respondents, being the largest insurance companies in Namibia, “collectively took a decision that they will defy the measures introduced by the Act pending the outcome of the proceedings instituted by them to have the notices compelling them to insure a certain percentage of their insurance with NamibRe.”
He said that those proceedings will take at least two years to finalise and during that period Namibia stands to lose at least N$1 billion per annum in currency flowing out of Namibia. This, he said, “will cause irreparable harm to NamibRe and the Namibian economy.”
He wants the court is to declare the respondents bound in law to comply with the Act, and regulations and notices promulgated under the Act, pending the final determination of the review and constitutional challenge they instituted. He also asked the court to direct the companies to comply in that interim period.
He said the relief is necessary in view of the insurance companies’ express statement that they have no such obligation and that they intend to continue their defiance and the consequences of that defiance.
Schlettwein further said the Act established NamibRe as a State re-insurance company responsible for reinsurance for insurance companies to lessen the risk to an insurer. “It is essential to a properly functioning insurance industry,” he stressed. According to him, NamibRe’s statutory obligations include the promotion of the development and the participation of the people of Namibia in the insurance and reinsurance industry, and the development of local retention capacity in insurance and reinsurance business to minimise the placement of insurance and reinsurance business outside Namibia and thereby prevent capital outflows.
“This is particularly important given the substantial degree of foreign ownership and control in the Namibian insurance industry,” the minister emphasised.
2018-08-30 08:08:40 23 days ago