ADDIS ABABA – The Ethiopian Reinsurance Share Company disclosed that it has saved hard currency previously spent on reinsurance services by insurance companies.
The company with a capital of one Billion Birr is a joint venture of 17 insurance companies and seven banks and 78 individuals. Formerly, about 30 percent of insurance companies’ income used to go to buying reinsurance services from abroad.
Company Business Development and Communication Manager Fikru Tsegaye, tells The Ethiopian Herald that the establishment of the reinsurance company is helping cut the huge foreign currency incurred by insurance companies to access reinsurance services.
So far, the company has saved over 64 million USD and is working on to provide efficient and reliable reinsurance companies. The company has also entered retrocession agreements that would give a green light to the company to operate in the Sub-Saharan region. “We are working to provide dependable reinsurance services both locally and internationally through nurturing adequate risk capacity.
Insurance company purchases reinsurance from another insurance company to insulate itself (at least in part) from the risk of the event of a major claim, Fikiru said. However, this service had not been rendered in Ethiopia until public and private insurance and banking companies came together to establish the domestic reinsurance company. “This is a great success that would promote the insurance industry and strengthen insurers’ capacity.”
As a business expands and grows, risk also looms and insurance companies do need reinsurance services to meet the growing demand for insurance services. This is how the insurance industry works business depends on insurance and insurers on reinsurers.
The Ethiopian Herald, December 27/2019
BY DESTA GEBREHIWOT
