By Rosemary ONUOHA
Available data in the insurance industry shows that the volume of business written by the industry in the last financial year was estimated at about N240 billion, as against N217.7 billion made in 2011.
With such a paltry figure recorded as Gross Premium Income, GPI, stakeholders continue to worry how the sector can play big in the energy sector.
It is in light of this that insurance operators, in 2013, made series of efforts to edge up capacity in oil and gas risks underwriting. Accordingly, there were moves to revive oil and gas insurance pools to enable operators play big in the energy business.
Specifically, the Nigerian Insurers Association, NIA, worked hard to revive the Nigeria Oil and Energy Insurance Pool, NOEIP, to enable underwriters maximise the nation’s comparative advantage in oil and gas production.
With the belief that the pool initiative will assist the industry improve on its oil and gas underwriting, there were modalities being put in place by operators to take advantage of the opportunity offered by the initiative to build capacity in the area of energy underwriting.
Following the report of the committee set up by the Commissioner for Insurance, Fola Daniel, for the industry to look into how it can explore the provisions of the Nigerian Content Act 2010 to increase the local retention capacity in oil and gas business in Nigeria, NIA’s Governing Council, through its committee, reviewed the report and recommended the resuscitation of the existing insurance pool.
According to Director General of the NIA, Mr. Sunday Thomas, the committee made progress in fine-tuning other details required for the effective take- off of the pool to enable it achieve its goals in increasing local capacity.
In going forward, Former Head of State and Head of Interim Government, Chief Ernest Shonekan, said that there is need for insurance companies to move out of the box and expand their businesses to be able to underwrite bigger businesses stressing that when Nigerian companies are given some special risk in oil and gas, they run abroad.
Shonekan said that all stakeholders in the industry must join forces to formulate creative policies in oil and gas business.
In the course of 2013, the Nigerian National Petroleum Corporation, NNPC, appointed 42 insurance brokers for it’s over N50 billion insurance risks.
The corporation paid part of the premium, while negotiation continued for payment of the outstanding.
The appointed brokers successfully placed the risks with reliable local underwriters and collected their commissions as specified in the new premium collection and remittance law.
Immediate past President of the Nigerian Council of Registered Insurance Brokers, Mrs. Laide Osijo said “I want to commend the NNPC for prompt payment of premium. Immediately the business was given, they complied with the ‘No premium no cover’ rule, and paid the premium. All the brokers that were approved for the business have taken their commission, which is highly commendable. With the payment, when claims occur, definitely underwriters will pay their claims. Brokers will help the NNPC in ensuring that the claims are paid promptly too.”
“I appeal to other ministries, departments and agencies of government to follow suit,” Osijo said.
Meanwhile, in the course of the year, the National Insurance Commission, NAICOM, said that local capacity in the underwriting of oil and gas business improved.
Commissioner for Insurance, Mr. Fola Daniel, said local capacity moved from less than 10 per cent to 48 per cent and the commencement of implementation of Section 50 of the insurance Act 2003 improved financial assets of operators.