High insurance premium crippling airlines – Airline Operators

The Airline Operators Association of Nigeria (AON) has said insuring an aircraft in Nigeria is about 270 percent higher than industry benchmark.

Thus, this premium rate represents the highest in the world.

The Chairman of the AON Capt. Nogie Meggison stated this when the AON visited the Minister of Aviation, Sen. Hadi Sirika.

The insurance quagmire was one of the several concerns the AON raised. The other concerns they raised included limiting foreign airlines to single or double entries into Nigeria, high cost of aviation fuel and the removal of VAT on air transportation as it’s in the case with other modes of transportation.

Giving details on the insurance, he said, “Today Nigerian insurance on aircraft is perhaps roughly 270 percent above what the market is paying.”

He explained that Nigerian airlines insure cheaper abroad but made to pay huge premium when they go through local insurance companies.

“I as a company, I have been turned down by Lloyd. They say after my insurance expires, they won’t be renewing it and that I should go through Nigerian insurance companies. The Nigerian insurance companies cartel have gone to Lloyd to discover that we are insuring directly and blocked it. An aircraft that we were insuring at Lloyd for $78,000, it’s been quoted for $260,000 by Nigerian insurance companies” he noted.

He also noted that, Nigerian insurance companies lack the capacity to insure aircraft thus serve as agents who get the deal, place it at Lloyd and get a commission thus, the higher the premium, the more money they would make.

In his remarks, the Minister of Aviation, Sirika said the concerns would be looked into.

He also said statistics from the ministry of finance show that aviation is the second fastest growing sector in the country as it grew 12.1 percent in the last quarter.

He also said four years ago, Nigerian aviation travellers was out at about 14 million annually, but now Nigeria does 18 million which shows growth.