Nigerian insurance companies are making waves in the oil and gas insurance business despite all odds to frustrate the local market from actively participating in the juicy business as the country underwriters led top accounts in 2009 with a sum insured of $68.083billion and premium income of $217.606million.
The $68.083billion and $217.606million are for 2009 top 13 oil and gas insurance accounts with Leadway Assurance Company, Lasaco Assurance and Sovereign Trust Insurance in the front drive.
Vanguard’s Sweet Crude can authoritatively reveal that the nation’s insurance companies are indeed leading the oil and gas accounts.
Of the top 13 oil and gas insurance accounts last year, Leadway Assurance had six of the accounts to its credit; Lasaco Assurance and Sovereign Trust Insurance have two each whilst Cornerstone Insurance and Guarantee Trust Assurance led an account each with Sic Insurance Company of Ghana.
Leadway Assurance led the NNPC-CIP for 2009/2010 with $35.676billion sum insured and $48.599milion premium income; Shell Operational with sum insured of $9.643billion and a premium of $9.484million; Mobil Operational with a sum insured of $3.243billion, premium income of $6.214million; OML 58 was insured by HSBC and Leadway, sum insured of $1.713billion and premium income of $3.138million whilst the Nigerian insurer led the Petrochemicals and NLNG (Bonny Gas Fleet) with sum insured of $509million and $210million respectively and premium income of $3.717million and $4.483million a piece.
Lasaco Assurance led the USAN account with sum insured of $3.4billion and $81.963million premium. Lasaco also led Chevron (Agbami) with $2.8billion sum insured and $9.489million income.
Sovereign Trust Insurance too is having a swell time in the oil insurance business on AKPO and Shell Bonga with sum insured of $3.793billion and $3.124billion. STI raked premium income from the two accounts to the tune of $9.632milion and $12.257million accordingly.
Meanwhile, Cornerstone led the Esso Exp (Erha) with $2.269billion sum insured and premium income of $8.521million whilst GTA led the Total accounts with $300million sum insured and premium income of $5.939million. And Sic Insurance Company led Kosmos (Tullow) with $1.414billion sum insured and premium income of $24.179million.
However, Nigeria insurance market is already making itself relevant in the financial service sector and improving on its contribution to the nation’s economy.
For instance, Nigeria generated $1.237billion of Africa’s total premium income for 2008 was $54. 713billion, South Africa raked in $42.515billion; followed by Morocco with $2.538billion; Egypt, $1.389billion; Algeria, $1.031billion; Kenya, $893million; Tunisia, $781million; Mauritius, $481million whilst other Africa countries generated $3.848billion.
Nigeria’s contribution to GDP in 2008 was 0.5; South Africa’s 15.3; Mauritius, 4.9; Morroco2.9; Kenya, 2.5; Tunisia, 2.0; Egypt and 0.9; Algeria, 0.6.
But Mr. Akin Ogunbiyi, Managing Director of Mutual Benefits Assurance Plc said that the Nigerian economy might have lost over $655 million (about N81.2 billion) market premium arising from oil and gas risks in the last three years, adding that the country might still lose another $910.2 million (about N112.87 billion) over the next three years.
Ogunbiyi put the Nigerian insurance market premium potential for 2005, 2006 and 2007 at $180 million, $225 million and $250 million respectively, while the estimated premium growth for 2008, 2009 and 2010 was given as $275 million, $302.5 million and $332.75 million respectively.
He said the estimated growth rate was predicated on a 10 per cent yearly increase in market insurance premium, noting that the majority shares of the assets were either covered in the international market with traditional insurers or under their captive accounts.
The Mutual Benefit Insurance boss noted that though the nation’s insurance industry could boasts of a total market capacity of $1.3 billion, meaning that the industry could have conveniently underwritten the total loss limit of the NNPC put at $800 million. He, however, highlighted some limitations which he highlighted
That most of the insurers do not have the oil and gas re-insurance treaty to guaranty their acceptance; the technical expertise to handle the underwriting complexities of the oil and gas risks is limited; and enough technical reserves have not been accumulated to sustain the cash intensive claims peculiar to the oil and gas industry.
Ogunbiyi said the local insurance industry was willing and ready to participate actively in the oil and gas as well as aviation sectors, adding that if properly aligned, growth and development could be facilitated.
According to him, â€œthe Nigerian insurance industry’s underwriting capacity is in accordance with universal standard market practice, where the individual retention can be 3% of paid -up share holders fund or 5% of paid-up capital for risks where there is no treatyâ€.