Checks by JOY BUSINESS have revealed a number of the insurance companies that have re-insurance arrangement with Ghana Re-insurance Company, Ghana-Re have negotiated new payment plans with the Re-insurer.
This comes after the Acting Chief Executive of Ghana-Re, Gustav Siale revealed to JOY BUSINESS the company is challenged in renewing its re-insurance cover for these companies because of the continuous default in the payment of their re-insurance premiums.
According to him, the outstanding premium-debt is a key factor that accounted for the recent downgrading of his company’s Issuer Credit Rating from BB+ to BB. He says even though the re-insurance cover of the defaulting companies are still in place, steps are being taken to ensure they pay their debt. “With the assistance of the National Insurance Commission, NIC we intend to pursue some of these defaulting companies. We’ve even teamed up with the other Re-insurance companies in the market like Mainstream Re. The management of these two companies often meet to look at issues and take a common position” Mr. Siale said.
“For example we’ve decided that if any company does not pay up to the second quarter of 2011, we will not renew its reinsurance policy terms for 2012. It shouldn’t come to to this. I must say that only four or five companies have been meeting their obligations out of the lot” he noted.
He however dreads of the phenomenon’s negative implications for payment of claims to especially clients affected by the October floods. He is therefore impressing on insurance companies, the need to fulfill their re-insurance obligations.
“About 67 percent of premiums written by us are still outstanding which means the insurance companies have not paid us. Meanwhile the direct companies have collected about 70 percent of their premiums locally and I only hope they will wake up and realize that they must fulfill their re-insurance obligations to ensure prompt payment in times of adversity” he said.
“Let me give you an example, what is going to happen is that, with the lot of losses as a result of the recent flood running into millions of Ghana cedis, I even wonder how some of them are going to pay because they owe reinsurers so much of money. Some of the companies owe us as much as 16 million cedis. So if you owe me this kind of money and a loss occurs where am I going to find money to pay your claims” he concluded.
Source: Joy Online