CG Re (Africa) to manage new Reinsurance Facility in the Democratic Republic of Congo

CG Re (Africa) has obtained a mandate by the Minister of Finance of the Democratic Republic of Congo (DRC) to assist with the setup and management of a new specialty lines Reinsurance Facility.

Administered by the Autorité de Régulation et de Contrôle des Assurances (ARCA), this new Facility for the Oil, Gas and Mining industries and for Political Violence Terrorism risks was created with the aim of combating the evasion of insurance premiums in the DRC.

Moreover, it will be the only provider of facultative reinsurance capacity for cedants subscribing to risks emanating from these industries.

The Facility will have a number of objectives, such as organising the subscription of insurable risks for all companies operating in the Oil, Gas and Mining industries, as well as organising the subscription of Political Violence Terrorism risks for all sectors of activity.

Other objectives also include conducting all negotiations relating to insurance for companies operating in the Oil, Gas, and Mining industries, subcontractors, licensees or other entities operating in these sectors in the DRC; and developing the retention capacity of insurable risks in the DRC insurance market.

It will also work towards building, negotiating and implementing, in partnership with the various insurance companies in the DRC, risk transfer mechanisms in order to secure reinsurance from international reinsurance markets.

Other targets include participating in the fight against insurance premium evasion and underinsurance: and establishing a map of localised risks in the DRC.

CG Re (Africa) will manage the Facility and it and/or the reinsurance brokers mandated by the manager are also authorised to place the risks mentioned above with local and foreign reinsurers emanating from the oil, gas and mining industries and political violence terrorism risks for all sectors of activity, according to the announcement.

As part of these operations, the ARCA will ensure that:

1. Legal and regulatory obligations are respected in all transactions;
2. The risk was presented either directly or through a broker approved by ARCA and remunerated in accordance with legal and regulatory provisions;
3. Subscription and issue of the entire insurance policy were made by one or more insurance companies approved by ARCA;
4. The reinsurance commissions to be earned by the cedant were set in accordance with professional standards and guarantee the cedant a remuneration which covers its expenses, in particular the remuneration of intermediaries and a margin (a differential between the reinsurance commission and the local brokerage commission) which cannot be less than 15% of the premium ceded for a risk ceded to the extent of more than 75%.

The use of the Reinsurance Facility platform will take effect on April 15, 2024 with a transition period of one month.

According to the announcement, the transition period only relates to insurance policies currently being negotiated whose expiry date is before May 15, 2024.

The Minister’s Office warned that any offending party will be prosecuted and punished in accordance with the laws and regulations in force in our country.

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