Consortium (GOGIC) has been formed by the Ghana Insurers Association (GIA) to help manage the oil and gas portfolio on behalf of stakeholders for the nation.
B&FT learnt that SIC Insurance Company Limited, the nation’s largest premium income earner, has been appointed the lead underwriter for the consortium.
All members of the Ghana Insurers Association underwriting non-life insurance business are stakeholders in this consortium.
This means that Ghana National Petroleum Company (GNPC), supervisors of the nation’s petroleum sector, will always have consultation with SIC Insurance over placement of oil and gas businesses.
B&FT was told that all insurance companies licensed to operate have been asked by the consortium to indicate their interest by acquiring shares in this new company.
Oil and gas insurance experts have described the move as a breakthrough for the industry. One expert told B&FT that with the formation of the consortium, all insurances would be placed locally and reinsured to international markets ¬who would in turn give the insurer reinsurance commissions of up to 12.5% or more depending on the class of business.
The experts also said this commission is no-risk revenue which can be used to pay for all the expenses of handling the business, fund training, and corporate growth to steadily increase market retention.
“Currently, there is a strong domestic insurance industry, but it has limited expertise in oil and gas insurance,” said one expert.
In a related development, he has advocated that the national assets together with the country’s interests in foreign ¬owned assets should be insured in Ghana by law.
By so doing, a local insurance company or consortium would retain profits and pay tax in Ghana on premiums paid.
Subsequently, he also proposed the appointment of an independent insurance/reinsurance consultant to guide local insurers in all aspects of oil and gas insurance.
This approach, according to the expert, encourages international reinsures to develop long-term relationships with the new consortium in providing sufficient capacity to support the local insurers of national assets.