Introduction
On 12 July 2024, the Non-Bank Financial Service Authority (“NBFSA“) issued Prakas No. 044 on Rules and Guidelines on Reinsurance (“Prakas“), aiming to ensure the safety and effectiveness of risk management and risk prevention for insurers.
The key features, among others, are outlined below.
Key Features
Reinsurance Agreement
Insurers shall prepare reinsurance agreement plans with local and foreign reinsurers and shall seek prior approval from the Insurance Regulator of Cambodia (“IRC“) after receiving their board approval.
Insurers shall seek approval from IRC for the reinsurance agreement plan for the following year before 1 November of every year OR seek approval for the reinsurance agreement plan for a particular insurance product together with the request for approval for the sale of such product.
Insurers shall prepare reinsurance agreements on the basis of one risk / one event containing at least the following minimum information:
- Risk retention level;
- Reinsurance level;
- Types of reinsurance agreement; and
- Target reinsurer and risk diversification.
Reinsurance Guideline
Insurers shall prepare reinsurance guidelines and shall seek prior approval from IRC 30 days after receiving their board approval.
Insurers shall prepare reinsurance guidelines in line with the applicable risk profile, business strategy and capital margin. The reinsurance guidelines shall contain at least the following minimum information:
- Determination and control mechanism on risk retention level by type of insurance product;
- Procedure on determination and accumulated risk assessment;
- Determination on reinsurance types and capacities;
- Selection and evaluation of reinsurers; and
- Conditions for the use of facultative reinsurance.
Insurers shall monitor and reassess the reinsurance guidelines at least once every three years.
Reinsurance Diversification
Insurers may transfer their risks to local and/or foreign reinsurers.
Reporting Obligations
Insurers shall submit a summary report on reinsurance for each year to IRC before 15 January of the following year. The reinsurance summary report shall contain at least the following minimum information:
- Reinsurance information which includes, but is not limited to, risk retention level, reinsurance level and amount of reinsurance premium by each reinsurer;
- Copy of reinsurance agreement;
- Proportion of reinsurance for the leading reinsurer and each participating reinsurer;
- Information about reinsurance compensation including emergency insurance compensation and unpaid insurance compensation from reinsurers; and
- Information related to other reinsurance agreements as required by IRC.
Disclaimer
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