Court orders insurers to indemnify IRS airlines

By Dickson Omobola

A Lagos High Court has ordered Standard Alliance Insurance Plc and 17 other Nigerian insurance companies, alongside a foreign third-party reinsurer, to indemnify IRS Airlines Limited over the total loss of its Fokker 100 aircraft (5N-SIK) following an accident in Niger Republic on May 10, 2014.

In a judgment delivered by Justice K. Jose, the court held that the insurers wrongfully refused to honour the airline’s insurance claim arising from the incident. The judge declared several aspects of the insurers’ defence invalid, particularly their reliance on undisclosed reinsurance terms that were not part of the original insurance policy agreement with IRS Airlines.

The court also faulted the insurers for breaching provisions of the Insurance Act 2004, noting that their handling of the claim involved improper reliance on foreign loss adjustment arrangements that were not transparently disclosed to the insured party.

Reacting to the judgment, Managing Director of IRS Airlines Limited, Yemi Dada, said the decision affirmed the airline’s rights and validated its compliance with all policy obligations.

According to him, the court awarded damages in the insured sums amounting to millions of dollars or their naira equivalent, alongside interest accruing from 2014.

Dada noted that the judgment vindicates the airline’s position that it fulfilled all contractual obligations, including full premium payments, prompt notification of the incident and full material disclosures at the time the policy was taken.

He added that the ruling provides long-awaited relief after years of financial strain caused by the unresolved claim, which contributed to significant debt owed to the Asset Management Corporation of Nigeria, AMCON.

“This judgment provides much-needed relief after years of financial strain, including significant debt to AMCON arising from the unpaid insurance proceeds. It reaffirms the rule of law in insurance contracts and protects policyholders from unfair denials based on hidden foreign arrangements,” Dada said.

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