Aviation Insurance: Experts seek review of 5% shareholding funds, lament access to forex for premium payment
Insurance industry experts have called on the National Insurance Commission (NAICOM) to review the current regulation, which limits total insurance cover for aviation at the maximum of 5 per cent shareholding funds.
The players in the industry said the review of this would spur growth in the Nigerian aviation industry, while also increasing economic activities in the country.
They made the call at an Aviation and Cargo Conference in Lagos with the theme: ‘The Role of Insurance Regulation in the Growing Aviation and Cargo Business in Nigeria’.
Aviation insurance is considered as a special risk and the premium is said to be high because of the high risk associated with the business.
In their various presentations at the conference, the insurance experts said, the limited insurance cover for the sector as stipulated in the law should be given a second thought.
The Director, Policy and Regulation, National Insurance Commission NAICOM, Mr. Leo Aka who represented the Chief Executive Officer of the Commission called for more capital injection to enable more local retention and licensing of more local reinsurers to address some of the major challenges facing aviation insurance in Nigeria.
These he listed to include, sabotaging local content Act requirements, accusation of high premium rates – Airline Operators of Nigeria (AON),Nature of reinsurance cover among others.
“We have had experience in the past where there were claims and the reinsurer abroad could not pay, we also prescribe how much you can take in aviation because of the risky nature. The highest you can take in terms of shareholders fund, you can’t take more than 5%, all these are to protect you”.
Managing Director of one of the insurance companies Mr. Edeki Isujeh raised the issues of access to the dollar for the payment of premium and called on the insurance regulator to liaise with the Central Bank of Nigeria for a special window.
“We have some players in the industry who will you they don’t have the dollar to pay their premium and what they have is naira that is a challenge for the insurance industry, where do you source the dollar from?”.
Another insurance expert, Mr Shola Ajibade, called for frequent communication between aviation stakeholders and the insurance companies to discuss their challenges.
“But the reinsurance side because it is not domicile in Nigeria it is worldwide, you need to be part of those things and there has to be a consultation, wide consultation of the stakeholders”.
Organizer of the conference, Mr. Ikechi Uko said, the event is meant to bring together airline operators and the Insurance companies to address the growing perception of exploitation of airlines by Nigerian insurance companies and the alleged use of the law to prevent them from using foreign insurers when they lack adequate capacity to insure a brand new aircraft but still charge high premium.