NIGERIA insurance companies are going after multinationals’ accounts including the Nigerian National Petroleum Corporation Consolidated Insurance Policy (NNPC-CIP) for 2009 insurance year as renewal season heats up.
Insurance companies are in renewal season whereby operators go after existing and news clients for 2009 insurance year. Insurance industry renewal season commence in earnest from August to March the following year.
And one of the major clients of insurance industry is multinationals which includes the NNPC. Insurance companies generate huge premium for the sector though a percentage of the oil businesses are ceded abroad.
A total of 39 insurance companies which have licenses to underwrite special risks are known to have been given 19.5 per cent of the US$20,516,569.65 business with Leadway Assurance Company Limited as the lead insurer.
The schedule for the sharing of the 100 per cent of the 19.5 per cent local market proportion showed that Sovereign Trust Insurance Plc is controlling the highest proportion with its 6.16 per cent allocation. The least proportion of the business went to companies with 0.9 per cent. They are Niger Insurance Plc, Guinea Insurance, Mutual Benefits Assurance, Standard Alliance, Universal Insurance and Anchor Insurance.
Although NNPC was said not to have submitted any final claim demand this year on its oil insurance programme considering the technicalities of arriving at loss estimate, underwriters are insisting that they are not likely to be held liable for indemnification of losses.
The local insurance companies had 52.5 per cent share of the plum account with Hogg Robinson as the lead broker for the local market in line with the Nigerian local content policy, while JLT Insurance brokers, UK is the foreign broker on the cover.
Mr. Segun Balogun, Managing Director of IntercontinentalWapic Insurance Plc in an interview with Vanguard in Lagos recently said that the insurance industry have build capacity, stating that the sector was still building more on its capacity.
But he noted that insurance companies needed to enhance their human capital especially in the area of oil and gas insurance.
He said, â€œIf you look at the shareholders funds or the capital of most insurance companies in the country, you will see that the figures are on the increase and for the human resources needed to handle oil, most insurance companies now are exposing their oil and gas staff to international training in order for them to be able to compete favourably. Within the next one to two years, you will see that the capacity will keep increasing and the federal will also increase the local content from what is it nowâ€.
He admitted that it was not easy too for NNPC to confidently rely on the local content. â€œYou know Nigerian National Petroleum Corporation (NNPC) was used to taking the business outside of Nigeria and what people resist mostly is change. Naturally, one would expect that an institution will feel more comfortable in a familiar terrain than a ‘strange’ terrainâ€.
â€œWell, oil and gas insurance in Nigeria is still an evolving thing. Every company is saying that they have oil experts but the truth about it is that we have very few experts in oil and gas insurance in Nigeria . We are one of the players of the oil and gas insurance and we have a full-fledged oil and gas insurance department manned by a professional who is well trained in sector and a number of other people in that department. In our way, we are pulling our weight in the oil and gas insurance. Our plan is to really be a big player in oil and gas insuranceâ€
Mr. Oye Hassan-Odukale, Managing Director of Leadway Assurance Company Limited, reassured stakeholders that Nigerian insurers are on track, taking on just a small portion of mega risks in the country; and saying the practice is in line with global best practice.
Odukale said, ”
The industry has capacity to underwrite oil and gas portfolio. What the industry needs to do is to continue to build and strengthen the capacity, keep building strong reserves and put in place good treaty security with the best local and foreign reinsurance companies. According to him, “In energy business, the foreign company will follow you to the market. Why did they do that? They wanted to make sure that the business is properly reinsured and to check that the price must be right. What matters to them is security and that the company is well securedâ€
“The capacity of the industry to underwrite oil and energy insurer was not in doubt as the industry has taken appropriate measures to develop and strengthen the technical and financial capacity of the insurance companies. Apart from the recapitalisation and consolidation exercise which has significantly boost the financial capacity of insurance companies, all the underwriting companies by regulation are required to have treaty arrangements with local and foreign reinsurance companies to provide the best security and protection for their clients.” According to him:
“The commission has also released guidelines on consortium bidding for oil, land, energy risks, which are additional measures to enable insurance companies to participate in the business. Our appeal is there for all stakeholders to co-operate with the industry in this regard.â€