BY KWANELE TSABEDZE
MBABANE– The Minister of Finance, Neal Rijkenberg has introduced the Reinsurance Bill to the Senate.
Minister Rijkenberg presented the bill and its objectives to the Senate Portfolio Committee at Lobamba today.
“The objectives of the Reinsurance Bill are to, introduce the reinsurance industry into the country, regulate the reinsurance industry in the country and make it mandatory for any person wishing to take reinsurance cover to take it with local reinsurance companies or provide for proportional reinsurance where at least a certain percentage of the cover is to be taken locally,” said the Minister.
The Minister added that this will impact the assets invested in the country, as currently, the insurance industry subscribes to foreign reinsurance companies.
The Committee also invited stakeholders like Lidwala Insurance to give some feedback on the bill before they continue deliberating on it section by section.
The Reinsurance Bill is aimed at helping companies who have huge insurance needs, as well as helping existing insurance companies to alleviate their risks.
An economist Menzi Shongwe said the reinsurance bill is set to decrease risk. He said Insuring large numbers of homes and businesses against damage is a risky business.
“Reinsurance spreads that risk out over several companies. Increases capacity. When the risk of insolvency is decreased through the use of reinsurance, it allows the insurance company to take on more policyholders. It eliminates the fear that the company would not be able to pay out all protections against large catastrophes,”, said.
In addition, he said insurance companies mostly need reinsurance in a situation where hundreds or even thousands of claims pour in at once. He said this almost always happens after a natural disaster such as a hurricane, tornado, or flood. When large percentages of policyholders suddenly need to repair the damage, reinsurance companies are key.
