Best friend of Nigeria’s aviation sector should be insurance — Olatunde-Agbeja

‘THE Aviation industry is a highly capital intensive one supported by many governments worldwide. There are a few private sector players but due to the need for deep pockets, and governments are great spenders by their nature and set up, Government participation has been very high. Nigeria, with a population of over 200 million people should be the largest player in Africa. Unfortunately, she is not. With the high volume of finance necessary to run an aviation company, it stands to reason that the best friend of aviators should be the insurance industry.’

These were the words of the Chariman of BOFF & Company, Insurance Limited, Mr Babajide Olatunde-Agbeja in his presentation at the recent CHINET Aviation and Cargo conference in Lagos.

While describing Insurance as a social device combining risks of individuals into a group, using funds (known as the premium contributed by members of the group and investment income accruing there from to pay for losses, Babajide said Insurance therefore involved the transfer of pure risk from the insured (the person/company confronted by the risk) to the insurer (the firm which specialises in the assumption of risk).

Making case for aviation insurance, Babajide called for urgent move to insure aviation and operational assets so that in the event of loss or damage, repair or replacement will be affected and the business continues smoothly.

“To provide cover for personnel against injury, loss of life or loss of license. To cater for liability that may devolve on you from your day-to-day operations and in the event of an incident/accident. Peace of mind. Once you have insurance, you will be able to sleep easier without worries.”

On how to reduce business losses, the insurance expert while stating how airlines had collapsed in the past as a result of inadequate insurance at the time of a major loss, he hinted about how insurance products can be used as a collateral to secure a loan from a financial institution in line with business expansion.

Speaking on the role of Insurance process in the aviation value chain, he declared:”Your only port of call should be to your insurance broker who shares your portfolio with various insurance companies according to their capacity, while they in turn, reinsure your portfolio with their reinsurers (in a pre-arranged manner).

In insurance, it’s the more the merrier, as insurance companies take only a small proportion of your large risks so that all manner of claims that may emanate are easily processed and paid in a timeous manner.

He listed the roles of an insurance broker to effectively manage the portfolio as the professional consultant to any airline/aviation to include: analysis of your operations to determine which insurance policies you require to effectively protect you in the event of a mishap, liaising and negotiating with the lead insurer (that commands respect in the industry for easy follower-ship) for the best rates, terms and conditions for the widest cover available for your operational needs.

“The volume of business is too low for economies of scale, premium wise. The government should provide long term, low interest rate loans for present operators to expand their business and to encourage new ones to spring up in the interest of Nigerians. Air cargo is our next golden income in Nigeria. The earlier we realise it and implement a smooth process of exporting goods and commodities, the better for our economy.”

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