BACKGROUND
The Economic Cooperation Organization (ECO) originally named Regional Cooperation for Development-(RCD) was set up by Iran, Pakistan and Turkey at a conference held in Istanbul in July 1964 with the aim of bringing the economies of these three countries closer together and thus enhances their chances of development.
HISTORY OF ECO POOL
The Insurance Industry was one of the domains where concerted action came early. The Reinsurance Organizations of the three countries came together and decided to establish of Reinsurance Pools of various classes of non-life business resulting in the following setup:
- Bimeh Iran (later replaced by Bimeh Markazi Iran) constituted the RCD Accident and Engineering Reinsurance Pools (1966 and 1968 respectively).
- The Pakistan Insurance Corporation constituted the RCD Marine and Aviation Reinsurance Pools (1966 and 1968 respectively).
- Milli Reassurance T. A. S. of Turkey constituted the RCD Fire Reinsurance Pool (1966).
The goal of these various RCD Pools was to increase the volume of business transactions both within and outside the RCD region (Iran, Pakistan and Turkey) and the retention capacities of their members.
With the aim of rationalizing the administration procedures the Management Board of RCD Reinsurance Pools decided to merge these into a single integrated Reinsurance Pool encompassing all classes of non-business.{mospagebreaktitle=History of ECO Pool}
The integrated RCD Reinsurance Pool which was entrusted to the management of the Milli Reassurance. T. A. S. started its activities on the 1st of January 1975 and has ever since been gradually enlarged their scope of activity till January 1996 when its headquarters were transferred to Karachi,Pakistan.
On July the 7th, 1985, the name of RCD Reinsurance Pool was changed to ECO Reinsurance Pool.
The membership of ECO increased to include the six newly independent states of Central Asia that were liberated after the break up of U.S.S.R. namely Uzbekistan, Turkmenistan, Tajikistan, Kyrgyzstan, Kazakhstan, Azerbaijan and also Afghanistan.
On 15th March, 1995, during a special meeting of the ECO Council of Ministers at Islamabad, Pakistan, which was attended by Foreign Minister for Economy of the Republic of Turkey, it was decided to transfer the headquarter of the ECO Reinsurance Pool to Karachi,Pakistan with effect from 01.01.1996.{mospagebreaktitle=Field of Operations and Goals}
FIELD OF OPERATION AND GOALS
The ECO Reinsurance Pool accepts all classes of non-life reinsurance and retrocession business excluding aviation, motor, credit and bonds business, except where it is incidental or part of a bouquet.
The original of the business is from the three founder Regional markets (Iran, Pakistan and Turkey). Business outside the ECO region consisting essentially of America, whether ceded directly or indirectly, is expressly shunned.
The ECO Pool’s goal encompass the fostering of cooperation among its members providing in the process, an additional and highly valuable underwriting capacity for ECO region and the Third World with a standard of reinsurance service equal to that provided by the international market, and, by matter of consequence, the improvement of member national insurance companies, reinsurance terms increasing their retentions, and, securing savings and even earnings of foreign exchange for the member companies and, therefore, their respective countries’ economies.
MEMBERSHIP
All the insurance and reinsurance companies from the ECO Region and the Third World, in general are eligible to participate in the Pool.
The process is incepted by the companies willing to cede business to the Pool forwarding its Managers the relevant particulars and statistics. The managers after a thorough study accept or decline these offers on the basis of their merits.{mospagebreaktitle=Reciprocity by of Retrocession}
RECIPROCITY BY OF RETROCESSION
After pooling the acceptance of the Pool, the entire business is retrocede back to the participating companies on original terms and conditions.
Ceding companies can choose to participate in the Pool’s retrocession business or opt for a non-reciprocal relationship.
The business thus retrocede by the Pool is well balanced and fully retainable by the participating companies on their account.
The retrocession shares to be allocated to the member companies are fixed every year according to the percentage of their cessions to the total premium ceded to the Pool in that year.
However, the reciprocity, which in principle, is of almost 100% may be of more or less than 100%. The exact proportion of this is determined by considerations such as longstanding profitability, constant increase in volume of cessions and prompt settlement of due balances.
EXCESS OF LOSS PROTECTION FOR COMMON ACCOUNT
The ECO Reinsurance Pool’s Regional and Outside the Region business is protected by a common account umbrella of excess of loss cover with an upper limit always above the Pool’s maximum liability per market/ per risk. This is reviewed each year by the Technical Committee which is a sub-committee of the Management Board of ECO Reinsurance Pool.{mospagebreaktitle=Management of ECO Pool}
THE MANAGEMENT OF THE ECO REINSURANCE POOL
The Managers are appointed by the Pool’s Management Board, its supreme organ, to carry out all the administrative work necessary for the proper functioning of the Pool.
The Management Board has entrusted the Management of ECO Reinsurance Pool to Pakistan, i.e. to Pakistan Reinsurance Company Limited (PRCL) with effect from 01.01.1996.
The pool maintains its account with the following banks:-
a) National Bank of Pakistan,
U.S. $ A/C No. 110126-8,
Main Branch I.I. Chundrigar Road,
Karachi-74000, Pakistan.
b) National Bank of Pakistan
PAK RS. A/C NO. 1632-5, (Expense)
P.N.S.C. Building Branch,
M.T. Khan Road, Karachi-74000
Pakistan.
c) National Bank of Pakistan
PAK RS. A/C NO. 1631-6, (Business)
P.N.S.C. Building Branch,
M.T. Khan Road, Karachi-74000
Pakistan.