Insurance

African oil, energy, aviation pools face increased volatility, pressure on premium

by Modestus Anaesoronye

May 23, 2018 | 12:51 am
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Insurance is a business of large numbers, and when this does not happen, a lot of pressure is seen on available premiums. This is what African Oil and Energy and Aviation Pools, owned by some members of the African Insurance Organisation (AIO) continues to suffer.

The level of patronage is not sufficient to make the pool sustainable and profitable as anticipated, underscoring while the pools are suffering huge volatility in its chosen area of the business.

Oil and energy risks as well as aviation are volatile risks that require a lot of technical capacity to underwrite because of its characteristics of high claims profile, which Africa Re no doubt have to drive operations of the two African pools.

Members of the pools, therefore must cede businesses to the pool if it must deliver value to members, and also gain capacity to play actively in and around the Continent.

Results for the 2017 operations of the pool released during the African Insurance Organisation Conference and General Assembly held in Accra, Ghana show that African Oil and Energy Insurance Pool paid out claims amounting to $20.44 million as against $4.66 million in 2016.

During the period under review, gross written premium was $27 million from $16.05 million in 2016, while gross premium earned also rose to $20.62 million from $17.27 million.

Profit for the year under review stood at $722, 183 in 2017 as against $47,882 in the previous year.

On the part of African Aviation Insurance Pool, gross written premium at the end of 2017 financial year was $943,996, as against $741,172, while gross premium earned in the review period closed at $883,149.

Further analysis of the result shows that the Pool paid claims amounting to $730,648 as against $1.48 million in 2916.

Profitability however dropped to $95, 247 in 2017 as against $2.05 million in the previous year.

The African Oil and Energy Insurance Pool were incorporated on 20th June 1986 during the 13th General Assembly of the AIO held in Bujumbura, Burundi, for the purpose of sharing Pool business and risks. It was an amorphous organization created to render the following specialized services to the members:

“Create capacity within Africa for oil, gas, petrochemical and energy related insurance risks emanating from Africa with a view to reducing foreign exchange outgo.”

 

“Provide adequate insurance cover to match the rapid technological advancement of individual African countries and to further ensure that oil companies operating in Africa are charged competitive premium rates in order to enhance profitability and stabilise the African oil insurance market.”

“Give technical support and advice to insurance companies operating in Africa on matters relating to risk management and insurance of oil and energy related risks.”

African Reinsurance Corporation manages the pool and is remunerated by way of commission based on the gross premium.

 

The African Aviation Pool also established the same time was to create capacity within Africa for Aviation insurance risks emanating from Africa, thus minimizing the foreign exchange outgo on aviation reinsurance of African airlines.

“Provide the African Aviation Insurance/ reinsurance marketer with underwriting, training and manpower development facilities to enable them have technically competent underwriters.”

It is also provide technical/professional services to the members of the pool on matters relating to aviation insurance/ reinsurance.

 

Modestus Anaesoronye


by Modestus Anaesoronye

May 23, 2018 | 12:51 am
12893  |   93   |   0  |   Start Conversation

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