(1) An insurer shall have arrangements approved by the Commission in accordance with die Regulations for the reinsurance of liabilities in respect of risks insured by the insurer in the course of its business as an insurer.

(2) An insurer or re-insurer shall utilize the local capacity available in insurance business originating from the local market before recourse to any overseas re-insurance.

(3) The Commission may, by written notice, exempt reinsurance contracts of a type specified in the notice from the requirements for approval under subsection (I).

(4) An insurer that contravenes subsection (1) is liable to pay to the Commission the pecuniary penalty stated m the First Schedule.