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The function of insurance is to protect the insured against potential heavy losses that he might incur from his daily activities. Almost any human endeavour carries some risks, but some are more risky than others. The Reinsurers provides a similar protection to the insurers and reinsurance exists because of insurance.

It is basically impossible to have a reinsurance placed without there being insurance in the first place. Simply put, without insurance, there would be no need for reinsurance. Fundamentally, reinsurance follows the same concept of insurance of spreading of risks both individually (one risk at a time) and aggravated (Catastrophes), following the Insurance Risk pattern:

Risk-Insurance- Reinsurance- Retrocession. Reinsurance therefore plays a very important, if not vital role in the insurance Industry. The Roles can be summarized under four headings; namely:-

  1. Providing capacity
  2. Creating stability
  3. Strengthening of finances
  4. Mobilization of funds for investment.

The importance of reinsurance is reflected in the costs insurers are willing to pay to acquire reinsurance protection and the fact that without adequate protection the Insurance Companies might not be licensed to do business. Even without legal requirements, reinsurance is important because without it, a company would be exposed to liabilities it might not be able to meet. Shareholders funds would be at risk as one large claim might wipe out the whole of the shareholders investments. Risks threaten our prime objective, which is survival in the face of accidental occurrence.

This threat calls for risk management, which entails the process of planning, organizing, leading and controlling the resources and activities of our organizations in the most cost effective way, with the aim of minimizing or eliminating the adverse effects of accidental losses. Risk management comprises risk control and risk financing measures. Risk financing are the techniques which provides for funds to pay for the losses when they occur. One of the methods is to transfer the risk to a professional risk carrier, usually an insurance company or Pool. Some risks are very large and beyond the capacity of an individual insurance company or even market to retain in full. In such cases, the most obvious option is for the company to accept the risk and share it with other insurance companies or reinsure it. Reinsurance is a means by which insurance company uses to reduce possible material losses from perils it has accepted. This effectively means that reinsurance is insurance of insurance.


The African Economies for along time relied on the West for their development funding. Towards late 1970s and mid-1980s however, there was a realization that any meaningful Socio- Economic development in Africa could only be achieved through mutual co-operation, and that the struggling economies could not wait for foreign assistance in the form of aid, which was diminishing fast.

There was a further realization that the aid, although welcome as a short term measure, only served to increase the already heavy debt servicing burden on the economies. Upon consultation with various experts, the African leaders arrived at the conclusion that they had to take deliberate economic and political self help actions to achieve social and political co-operation amongst their countries on the broadest terms possible.

This approach was found to be feasible and essential if they were to experience meaningful changes and growth in their economies. In order to achieve broadest co-operation front possible, states agreed to take in common steps calculated to furthering their aims by creating the necessary political and economic organs. Treaties were agreed up on and signed. These treaties were aimed at promoting co-operation and developments in the fields of economic activities within the continent with the view of raising the standards of living of the people, fostering closer relationships among member states and contributing to progress and development of the Continent as a whole. Such treaties created the formation of some of the Continental and Regional Reinsurance organizations we have today.


  2. Regional reinsurance companies were started with the aim of provision of reinsurance capacities through the underwriting of reinsurance business and thereby retaining within the region part of the business which were hitherto reinsured outside the region. In every branch of insurance, there are risks which, because of their sizes or their nature, an insurance company cannot afford to keep for its own account. Such risks are numerous, the Commercial Passenger aircraft being an example. These risks would be beyond the limit which is prudent for one insurance company to carry, and it is necessary for that company to affect reinsurance. Local insurance companies for along time depended on International markets for reinsurance of their risks as individually or even collectively, they were not able to retain large portions of the risk. Conducting business with international reinsurers meant that the individual local companies had to export money abroad. The amount of money thus exported formed a large portion of each country’s payment for international services. Since their formation, the regional and local reinsurers have curbed this outflow of cash so that the reinsurance premiums are retained and invested in the region. The reinsurance companies have therefore created reinsurance capacities which have enabled acceptance and retention of larger risks. This has its benefits in that our growing economies with their peculiar African characteristics have had local grown support/solutions. Statistics for the period between 2004 and 2010 indicate that the local and regional reinsurers (Africa Re, Kenya Re, Zep-Re, and East Africa Re) have written a gross premium income of US$. 3,496,173,270 . By the end of year 2010, total investment for the four regional reinsurers was US$. 4,130,127,298, with total assets amounting to US$. 1,314,022,327. The multipliers effect of this invested premiums have had profound effects on the Economic Activities of the region WRITTEN PREMIUMS AND INVESTMENTS MADE BY THE REINSURERS. The table below shows details of gross written premiums, investments made and the asset base of the Regional Reinsurers between years 2004 and 2010. Figs in US$. UY WRITTEN PREM INVESTMENT S TOTAL ASSETS 2004 321,558,673 297,675,022 672,019,056 2005 378,786,571 428,653,654 723,779,510 2006 385,461,141 572,712,833 809,278,414 2007 477,078,498 733,755,795 962,774,071 2008 505,775,104 623,607,851 960,143,851 2009 659,340,935 687,574,885 1,155,508,879 2010 768,172,348 786,147,258 1,314,022,327 TOTAL 3,496,173,270 4,130,127,298 6,597,526,108
  4. Reinsurance companies have added stability to the insurance industry and to the local economies by evening out the results of the insurance companies as they continue to absorb the impact of large losses which would have lead to very damaging results to the individual insurance companies. In the recent past, there has been an upsurge in the numbers (frequency) and size (magnitude) of the claims. The reinsurers have proved themselves by settling the claims and facilitating the return of production to the affected industries and other business concerns. Wide swings in results of an insurance company can be very damaging to its image with the public and will cause a lot of concern to the shareholders. One area of concern is that International Reinsurers being the fair whether friends they have proved to be usually pull out from the African markets during the tough times, when profits are low, profits being their major objective. They will however sneak back whenever the conditions become more favorable. This in and out movements leads to a very volatile and unstable situation which impairs economic growth , as the insurance sector plays the key role of protecting the economic activities. Their withdrawal means that the indigenous African insurance companies would have no reinsurer to turn to and would in turn be bullied into accepting terms that are inclined to exportation of more premiums outside the continent. The regional and local reinsurers have effectively given the capacity and stability needed whenever such withdrawals occur and will continue to do so as they are here to stay.
  6. The other main role of reinsurance has been in its financing aspect. One of the yardsticks used by regulatory bodies in controlling insurance companies is the measure of their solvency. This is calculated by the percentage which the capital and free reserves of the company bears to its gross net premium income. These authorities have minimum solvency requirements below which they would not allow companies to operate. By ceding premiums to reinsurance company, the insurance company automatically enhances its solvency margin.
  8. Regional reinsurers have served to create forums for exchange of ideas by companies in the region. Markets used to be so far apart depending on their colonial histories. The neighboring countries with different colonial histories knew virtually nothing or very little about each other.
  10. In addition, the Regional Reinsurers are seriously engaged in the manpower development for the insurance sector by offering technical services as well as training opportunities in the region to enhance insurance and reinsurance knowledge. Regional reinsurance companies have also provided employment opportunities which have improved living standards and welfare. The Regional reinsurers have participated in the insurance and reinsurance activities, such as loss prevention exercises, creation and Management of insurance and Reinsurance pools, notably The COMESA Yellow Card Reinsurance Pool, The African Fire Pool, The Oil and Energy Pool , The RCTG Pool among others. These pools in their own ways have contributed to the economic development of the region. As part of the global players, the reinsurers have been able to attract international funds through reinsuring of risks with international players. For the liabilities ceded out, the international reinsurers have responded whenever a claim situation arises, and this has brought in funds from overseas. In summary we can say that the regional and Regional reinsurers have played their roles very well in enhancing Economic development.


The challenges facing the insurance and reinsurance sector are profound and there is no sign that there will be relenting soon. The challenges are both internal and external. The most obvious challenges that come to mind are:- Lack of skilled manpower, The sector will certainly need better trained, better quality people to maintain the pace of growth so far achieved. The reinsurers have chipped into these areas by offering activities geared at the development of the technical skills necessary. Slowing and stunted economic growths, Trends in the world economic, political and domestic priorities are changing at a very fast rate and in a manner that is unpredictable. Most of the remedies prescribed by the Western based development agencies have created adverse effect in our developing Economies with the low income and debt servicing problems. Changes in the environment There have also been changes in the environment which are uncontrollable. These changes in the environment have given rise to the emergence and increase in the occurrences of natural catastrophes such as Earthquakes and Tsunamis, storms and floods etc. The frequent occurrence of these events is likely to spell doom to most insurers and even reinsurers as they might not be adequately prepared for them. The catastrophic covers arranged with international reinsurers are not adequate as such covers are usually very expensive to purchase. Unhealthy Competition: Unhealthy competition amongst reinsurers poses another major challenge as the practice involves rate cutting and offering of soft and un-economical terms.

This is a dangerous situation as no business concern can survive if it cannot meet its obligations, due to lack of revenue. This problem has further been compounded by lack of proper understanding of risks and lack of credible data that can be used to develop rating guidelines and claims models. However all is not lost as reinsurers in conjunction with the world players in the field are coming up with solutions to some of the challenges. Political Instability: Another major challenge has been the Political Instability in some member states. This has led to slow growth in some sectors of the economy, and a general reduction in investments, which is the main operating area of the insurance and reinsurance sectors. The Political Instability also creates chaos which leads to losses and damages which would result in adverse claims experiences. In addition the instability leads to other economic problems, which usually accelerate the incidences of crime, fraudulent claims and general normal hazards.


Office Contacts

  1. Head Office
  2. Regional Hub
  3. Country Office
  4. Regional Hub
  5. Retakaful Window
  6. Uganda Office
  7. Ethiopia Office

8th Floor, ZEP-RE Place,
Longonot Road, Upper Hill,
P.O Box 42769-00100,
Nairobi, Kenya
Telephone: +254-020 4973000/2738221

Cocody Canebiere, Cocody,
08 BP 3791 Abidjan 08,
Côte d’Ivoire,
Téléphone : +225 22 40 27 85 / +225 55 61 71 01

No. 54, Plot No. 356184,
Base Park (Diamond Park), Alick Nkhata Rd
P. O. Box 36966
Lusaka, Zambia
Telephone: +260 211 252586

16th Floor -North Wing, Joina City
Cnr Jason Moyo and Inez Terrace
Harare, Zimbabwe
Telephone: +263 4 777 929/932

Reinsurance House Building
P. O. Box 3224
Khartoum, Sudan
Telephone: +249 183 799357/8/9

Kampala, Uganda
Lourdel Towers, 5th Floor
Nakasero Kampala

Addis Ababa, Ethiopia
UNDP Regional Services Centre, Ground Floor
Bole Olympia Roundabout behind Deluxe Furniture,
Addis Ababa, Ethiopia

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