Stronger insurance-aviation synergy needed for safety, global relevance – Experts

By Dickson Omobola

Stakeholders in the insurance and aviation sectors have warned that the country’s air transport sector may not achieve global competitiveness without stronger insurance support.

The industry experts also argued that given the large fleet size in the Nigerian aviation sector, alongside potential risks and accidents, insurers and aviators must synergise to increase business confidence and ensure reductions in losses.

Those who spoke at the Fifth Chinet AviaCargo Conference themed: ‘The Emerging Synergy between Aviation and Insurance,’ held in Lagos included Commissioner for Insurance and Chief Executive Officer of the National Insurance Commission, NAICOM, Mr Olusegun Omosehin; Chairman of Nigerian Insurance Association, Mr Kunle Ahmed; Chairman Boff & Co. Insurance Brokers Ltd, Chief Babatunde Olatunde-Agbeja; and President of Professional Insurance Ladies Association, PILA, Mrs Bimbo Onakomaiya.

Although they said considering that only 40 per cent of insurance companies in the country could write aviation risks due to limited capacity, Section 15 of the Nigerian Insurance Industry Reform Act 2025, NIIRA 2025, has mandated an increase in capital for insurance companies from N3 billion to N15 billion.

Competitiveness

Speaking at the event, Ahmed said: “The insurance industry has started writing big risks across the oil and gas and aviation sectors. One of the hallmarks of the insurance companies is the ability to open their books to external assessors. Some Nigerian insurance companies have international ratings.

“We have companies in Nigeria that can compete with other companies across the world. The Nigerian insurance industry has the capacity and experience of arranging insurance cover for all of the risks they are exposed to within the aviation sector, be it the insurance of aircraft, the insurance of cargo from one location to another. “Whatever arrangements an operator has with lessors on aircraft acquired (whether dry lease or wet lease), Nigerian insurance companies can put together cover proof insurance policies.

“Section 81 (1-5) NIIRA ACT 2025 now makes it compulsory for aviation practitioners, be it the insurance of aircraft, cargo handlers and other ancillary services must have an insurance policy that must be deposited with NAICOM seven days before the commencement of operations.”

Synergise

Also speaking, Onakomaiya called for synergy between insurers and aviation professionals, saying cooperative action was the secret to unlocking global competitiveness.

She noted that Nigeria’s aircraft registry contains no fewer than 370 aircraft, including 147 belonging to the Nigerian Air Force and 170 to commercial operators, adding that such a large fleet requires robust insurance coverage.

She said: “The regulator for the airlines is the NCAA. We have about 31 airports, 92 airstrips and about 13 scheduled commercial aircraft operators. These numbers are still growing. There is no way you will have such a high number of aircraft in terms of fleets (not the highest in Africa) without having a very strong insurance backing for this aircraft.

“Working hand in glove with the Nigerian Insurance Association, NIA, and the better part of synergy is what we can expect. We cannot expect synergy if one of those industries is not strong. There is a need for cooperative action. The Nigerian economy is a developing one, and it is heavily reliant on trade, logistics and transportation.

“In transportation, one cannot do without the aviation industry. As insurers, we must cover and promote business confidence and ensure that all the risks involved are mitigated, just as losses are minimised when accidents take place. When there is stronger collaboration, it will enhance safety; deepen Nigeria’s ability to compete in the global aviation industry. There is no way the aviation industry will grow in leaps and bounds without the insurance industry supporting it. The bank may provide the funds, but the insurers provide the peace of mind.”

NIIRA ACT 2025

Omosehin, represented by Deputy Commissioner for Insurance at NAICOM, Dr Usman Jimada, reassured stakeholders that the Nigerian insurance industry was fully compliant with global practice globally as far as financiers and aircraft were concerned.

While also identifying the benefits of the NIIRA ACT 2025, Omosehin said “the act has placed the insurance industry in a very important position in the Nigerian economy. NIIRA has brought to bear the Insurance Policy Holders Protection Fund. The era of companies not being able to settle claims is gone for good. NIIRA now stipulates a shorter time frame for settlement of claims. Before now, it was around 90 days. Now, it has been shortened to 60 days. The 60 days are also subject to NAICOM. Insurers companies in Nigeria now settle claims faster, especially in the aviation sector even before their foreign counterparts. That has happened basically because we have now extended our enforcement action to that sector.”

Meanwhile, Olatunde-Agbeja said with the NIIRA ACT 2025, some insurance companies had become stronger and better funded, noting that they now have a larger capacity to insure aviation related risks.

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