Thursday, January 31,
2019 10.17AM / By Omobola Tolu-Kusimo of TheNation
The National Insurance Commission (NAICOM) has suspended Guinea Insurance Plc from doing new businesses, it was gathered on Wednesday.
Sources within the insurance industry said the suspension took effect from January 29 this year.
Going forward and until the suspension is lifted, the firm cannot take on new businesses and will only maintain the existing businesses in its portfolio.
NAICOM, it was gathered, suspended the company because of its failure to appoint a substantive Managing Director, failure to secure reinsurance arrangement, among others.
A reinsurance agreement is a necessity for an insurance business. It is an agreement between an assuming and ceding company to cede and assume all risks within a class. This protects companies against large risks and in turn enables their claims payment.
Reinsurance allows insurance companies to write larger amounts of insurance, protects against large losses, helps insurers to protect their internal business against swings in business cycles and stabilizes their year to year operations, and helps provide underwriting expertise for new lines of insurance or new markets. A company that purchases reinsurance pays a premium to the reinsurance company, who in exchange would pay a share of the claims incurred by the purchasing company. The reinsurer may be either a specialist reinsurance company, which only undertakes reinsurance business, or another insurance company.
The market awaits their notice to the stock exchange on this development.
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