Guest Lecture- Rediscovering Insurance in the Lost Continent

The Finance club at IIFT Kolkata, organized the guest lecture on Reinsurance, on July 4, 2009. Here is the brief on the event.
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In an era where insurance claims have reached astronomical proportions , Reinsurance has emerged as an integral part of the entire insurance framework. It is almost impossible for a single insurer to withstand all the claims from his own account. Reinsurance or the insurance of insurance helps insurance companies to spread their risk & stabilize their bottom line. With its rising importance in the financial sector, reinsurance has also emerged as an exciting career option.

The Lost Continent, Africa has not been left untouched by the phenomenon of reinsurance and the company spearheading Africa’s growth in this arena is African Reinsurance Corporation, the largest reinsurer in the continent. Mr Souvik Banerjea, a senior underwriter from the African Reinsurance Corporation shed light on various aspects of this growing field and the world of insurance in general, in an invigorating guest lecture at Indian Institute of Foreign Trade, Kolkata.

Mr Banerjea has a wealth of experience in this area, both in India and abroad, having previously worked for over 20 years in New India Assurance, with a 4 year stint in Japan, before moving on to Nairobi to work for the African Reinsurance Corporation. He shared his vast experience with the students of IIFT, who were introduced to a hitherto lesser known but emerging area in the gamut of finance. The session covered various aspects of insurance, from its genesis in the days of yore with bottomry bonds to new age concepts like alternative risk transfer. Financial instruments like Multi Line Products, Multi Trigger Products and Insurance Derivatives which have gained importance in the recent past were discussed. Of course the focus of the session was Reinsurance, whereby an insurance company transfers its risk to a reinsurer. This obviously reduces the risk undertaken by the insurer. Reinsurance being a primarily international phenomenon, not having caught on adequately in India helps insurance companies to diversify their risk geographically. Reinsurance also empowers insurance companies to take on larger risks and develops relations between insurers. Reinsurance can be done either through treaties entered into at the beginning of a period whereby the reinsurer examines the portfolio & future potential of the insurance company and sets a price , or on a facultative or case by case basis, wherein performance of the individual risk is considered along with safety measures and management of risk, before setting a price, this is especially done in the case of large risks.
Apart from enlightening the students on insurance and reinsurance , in particular Mr Banerjea also awakened students to career prospects in Africa. People generally carry a very negative impression about working in Africa, but Mr Banerjea did a great deal to dispel any inhibitions that students had in this regard. Rather, Africa is a place where there is great potential for growth and the very fact that it has not been explored to a great extent , makes it an exciting career destination.

The session aptly demonstrated the importance of and the high growth prospects in the field of Reinsurance , and also awakened students to the fact that Africa may well be the next frontier, as far as carving out a great career is concerned.

Contributed by Titash