CONTRARY to the insinuations that Nigerian insurance firms cannot insure airlines’ assets, particularly aircraft, the Commissioner for Insurance and the Chief Executive Officer of the National Insurance Commission (NAICOM), Olusegun Omosehin, has said that even if an airline purchases an aircraft, it is an international requirement that it has to be insured, but no insurance company can do that in Nigeria.
Omosehin who gave the clarification at the fourth ‘Chinet’ cargo summit held in Lagos, said: “The other one on insurance is that there is no capacity internally to do big aircraft insurance in Nigeria. So many lessors are not operating in Nigeria because of insurance. It is killing business because though you want to do indigenisation, you cannot do that with another person’s assets.
“Even if you buy an aircraft today, it is a requirement that you have to insure it even if you pay with your money in Boeing, Embraer or whatever. The insurance must cover Boeing even though they have sold it to you, they must be partly insured in that transaction. So you can’t escape the international requirements of the business and limiting it locally will not help lessors.”
Omosehin acknowledged who said that the issue of capacity in terms of aviation insurance in Nigeria was quite easy and clear, however, said that the capacity of underwriters in the market is determined and measured by what they have in addition to the re-insurance capacity that is made available to them.
He said: “This is affirmed on an ongoing basis by the regulator. From time to time, we look at policies that are issued vis a vis with their solvency state. We review that in consonance with the relevant treaties they have entered into with re-insurance globally.
“The reality of aviation insurance is a global business risk emanating from one country criss crossing borders. Many of them often end up in Lyolds of London and this is not peculiar to Nigeria. Other countries, even risks emanating from the United States will end up in Lyolds because they have a great appetite for aviation risks and that is why they are re-insurance.
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“I don’t see why we consider this as an issue but I think that there is a major issue around the demand of financiers that oftentimes are financing aircraft for the majority of our operators because they are the owners of capital, they then want to dictate where the insurance should be done. In this instance, these risks which are the aircraft are going to be flown in Nigeria, carrying Nigerian passengers operating Nigerian routes.”
The insurance commissioner said risk cover was subject to available re-insurance backing, adding that all over the world, the best re-insurance occurs hence, not limited to Nigeria.
He said: “Mind you, every January of every year, we review the re-insurance treaties of every underwriter in this market to ensure it meets with international standards and it is on that basis that we approve their treaties before they are allowed to operate.”
Omosehin equally attributed the high capital-intensive nature of aviation to why insurance firms were being careful with underwriting risks in the sector.
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