By: Nghiinomenwa Erastus
In the last five quarters of the Namibian economy, companies and households have spent N$1,1 billion paying foreign Lloyd insurance underwriters.
This is according to the Namibia Financial Institution Supervisory Authority (Namfisa) second-quarter report released this week.
Similarly, the non-Lloyd’s industry premium leaving the country on a quarterly basis, on the exemption, is valued at N$753,5 million for the past five quarters- just because the country’s underwriting is not sophisticated enough to take on certain covers.
Most business written at Lloyd’s is placed through brokers who facilitate the risk-transfer process between clients (policyholders) and underwriters.
Together Lloyd and no-Lloyd industry premiums that left the country for the past five quarters amount to N$1,8 billion, as the country lacks certain insurance services that are fully developed to cover certain risks.
According to Namfisa assessment, most of the premiums leaving the country under Lloyd’s market emanated from underwritten premiums in the miscellaneous insurance class during the period under review.
Lloyd policyholders include businesses, organisations, other insurers, and individuals worldwide who seek to mitigate the impact of potential risks.
Policyholders may access Lloyd’s market via a broker, coverholder or service company.
Namfisa attributes the savings flight on the under-developed insurance sector and calls on the short-term industry to develop the skills and capacity required to keep the money in the economy.
“Due to the large premiums leaving the country in the Lloyds and non-Lloyd’s market, the short term industry is encouraged to consider and develop local underwriting capacity of these classes of insurance to enhance and develop the local insurance market,” read the report.
Every year, premiums leaving the country decreased by 52% to N$8 million during the review.
Similarly, the non-Lloyd’s industry premium leaving the country decreased from N$509,1 million to N$23 million every quarter. It increased every year from N$14 million to N$23 million at the end of the second quarter of 2021.
However, the reduction in the outflow of premium does not mean the sector has developed its capacity but rather due to the fact that sectors were and still struggling to pay for their premium.
Covid-19 direct and indirect impact slowed economic activities, and many sectors became constrained- with the aviation sector badly hit in terms of inability to cover its insurance premium.
“Due to the ongoing covid-19 pandemic, some business operations such as aviation have been slow, resulting in no premiums undertaken in some quarters,” read the report.
However, the outflow of premium presents an investment opportunity to the existing short-term insurance company and those willing to enter to cover the gap and keep the money in the economy. Email: erastus@thevillager.com.
