The National Insurance Commission (NAICOM) has explained that the law guiding insurance operations in the aviation sector stipulates the withdrawal of a minimum of five percent of shareholders’ funds to protect operators from third parties’ liability.
Besides, NAICOM and other Insurance operators dismissed insinuation that Nigerian Insurance Companies cannot handle aviation related insurance including aircraft insurance.
Commissioner for Insurance, Mr. Sunday Thomas, who spoke through the Director of Policy and Regulations, Mr. Leonard Akah explained that in aviation insurance, the highest shareholders could take from their funds “is not more than five percent.”
“This is to protect you because usually the third party’s liabilities sometimes could be overwhelming because life has no value,” he said.
He spoke on the role of Insurance Regulation in Growing Aviation and Cargo Business in Nigeria at the second edition of Chinet Aviacargo conference which kicked off in Lagos on Wednesday.
He stated that while every airline operator is required to insure their businesses 100 percent as stipulated by the law, many of them are not finding it easy to pay their premiums as and when due.
“So they are breaking it into bits, some monthly and all that but our law says no premium, no cover. So if you don’t pay, you are on your own and you can’t fly if you don’t have insurance. This is an issue, even to access the foreign exchange because the parts, everything is foreign, even to access this currency is not easy,” he said.
Thomas listed other challenges to aviation insurance to include sabotaging local content Act requirements, insufficient technical expertise, instalmental premium payment, limited local capacity and nature of reinsurance cover.
He advocated more capital injection to enable more local retention, enhanced cooperation among NAICOM, the NCAA and NCMB and more engagements with airline operators.
Managing Director of Cornerstone Insurance PLC, Mr. Ganiu Musa dismissed the insinuation of lack of capacity by local insurance operators, saying the amount of risk covered by Nigerian Insurance firms in oil and gas is hundred fold more than aviation.
“If you look at the total airline operating cost, the insurance cover is less than 5 percent,” he said.