Premium income accruing from oil and gas insurance has maintained its upward movement in 2008 as the industry recorded 11.5% growth at N17.4billion up from the 2007 position of almost N13 billion.Â Total number of insurers writing oil and gas remained 20 out of the total 42 licensed to write such businesses.
Unlike in the past when premium from oil and gas accounted for a small proportion of total industry gross premium, it currently ranks third after motor and general accident and is likely to overtake general accident in premium generation in the next two years given the trends.
The growth in oil and gas premium is currently fuelled by legislation and government local content policy which requires Nigerian content in all transactions in the oil and gas business.
Currently, Leadway is rated number one in terms of premium income generating almost 60% or N11.6 billion of the total premium for that class of business during the year under review. Industrial and General Insurance Company (IGI) trailed behind with N2.5 billion.
The records are contained in the current edition of Nigeria Insurance Digest, a statistical journal of Nigerian Insurers Association.
Records also show increased reserving for this class of business as total reserves rose to about N2.8billion.Â Insurance funds for oil and gas business increased about 120% during the period.
Players believe the total industry retention and premium would double if more local capacity was sought in the local market before ceding abroad.Â While many have continued to praise governmentâ€™s local content policy as helping indigenous insurers participate in the global placement of energy risks, some say a level playing ground must be promoted to ensure competition.
Already operators in the sector are decrying lack of transparency in handling the local content policy and only making it easier for people that have access to government.
Despite the setbacks, Commissioner for Insurance, Mr Fola Daniel said participation by local underwriters will continue to grow in time as government and players fine-tune the processes.Â He also included it as one of the drivers of attaining over a trillion naira industry premium in the next three years.
One of Nigeriaâ€™s leading newspapers had closed the year with an editorial demanding quick passage of the bill noting; â€œIt is indeed soothing to know that the legislation is quite far-reaching. The new law stipulates that Nigerians must be reasonably and visibly involved in all the oil and gas exploration and marketing processes.â€
A joint committee on petroleum and gas resources of the House have recommended that within four years of the enactment of the law, all oil companies operating in the country must have their management cadres dominated by Nigerians.
On job placement issues, the bill stipulates that even in the commercial aspect of the sector, Nigerians â€œshall be given first consideration in the award of oil blocs, oil field licenses, oil lifting licenses and shipping services; and all projects for which contracts are to be awarded in the Nigerian oil and gas industry.â€
The all embracing legislation also demands that even in succession matters, Nigerians must be favoured in such a way that any top management position not presently held by a Nigerian, should be subsequently filled by a Nigerian after due training and understudying have been provided. Besides, training Nigerians within and outside Nigeria has become compulsory for oil industries so as to equip Nigerians with the requisite technical and management skill that can keep them in the commanding heights of the oil industries.