STORIES By Favour Nnabugwu
The Nigeria National Petroleum Corporation (NNPC), local insurers and brokers are yet to conclude negotiations on the multinational’s insurance accounts for 2011 just as the corporation has given all parties involved 31 days grace to round up their bid for the account.

The NNPC has tightened up its business dealings with insurance companies especially the local market as a result of last year’s allegations and publications against the oil corporation concerning it insurance accounts. With the prolonged negotiations, the oil corporation has requested for an extension of cover on its insurances which expired December 2010 by 31 days so as to enable it conclude the cover for 2011 insurance year. When an insurance policy or contract terminates,  the coverage could continue for 31 days after the terminating date. No premium is paid during the 31 days, meaning that the companies that insured the accounts for 2009/2010, are still to hold on the cover negotiations are concluded on the new cover

Aside that, National Insurance Commission (NAICOM)  also has tightened its noose against insurance companies and broker that do not meet requirements for the big accounts that plan to find their way into participating in such deals hence the strict compliance model adopted for 2011/2012 accounts.

Vanguard investigations revealed that Custodian & Allied Insurance, Leadway Assurance, Lasaco Assurance Plc, International Energy Insurance amongst others are prominently vying for the accounts.

The nation’s insurance industry has achieved a step forward in the effort to implement the local content Act. The achievement is coming on the heels that issues surrounding capacity, which has been a major challenge for operators has bottomed out in favour of insurance companies with the local content act.

According to the act “capacity shall mean the aggregate of all Nigeria registered insurers and reinsurers, which shall be fully exhausted prior to any application for approval to reinsure any Nigerian oil and gas risks overseas”.

Making it more favourable, an insurer’s capacity for oil and gas shall be the net retention of that insurer plus its reinsurance treaty capacity, while the reinsurance treaty capacity of a consortium of insurers is also acceptable.

Besides, any other reinsurance facility, other than the treaty is acceptable as an insurer’s capacity provided there is evidence that the risk has attached and cover provided by an acceptable security.

Mr Fola Daniel, Commissioner for Insurance said that the  guideline was a major milestone in the effort of government and the Nigerian Content Monitoring Board (NCMB) to see the industry take its rightful place in the Nigerian Content Act.

Daniel said “The National Insurance Commission has recorded a major milestone through putting together  the guideline” The commission, the NAICOM helmsman reiterated,  is determined to ensure the Nigerian Local Content Act works  for insurance industry whilst the regulatory body,  will ensure  everything within its powers to entrench international best practice; encourage voluntary rating of insurance operators; license new broking firms with expertise in oil and gas; preferential licensing of reinsurance companies; strict enforcement of the claims settlement  provisions of the Insurance Act 2003 and reinvigorating NAICOM’s complaint bureau.

Foreign reinsurance companies wanting to provide reinsurance treaty capacity to Nigerian insurance companies, particularly in the area of oil and gas business, are now required to have “A” rating from either Standards & Poor’s (S&P) or A.M. Best.

This formed part of the guidelines by the National Insurance Commission (NAICOM) for the purpose of establishing uniform set of rules, regulations and standards for contracts of insurance within the oil and gas industry in Nigeria. NAICOM says, “All reinsurance arrangements with a foreign reinsurer shall be with a company having a minimum financial strength rating (FSR) of S&P “A-” or A.M. Best “A” rated companies”.