Managing Director of Boaf Insurance Brokers, Mr. Olumide Fatogun, has asked underwriters in the insurance industry to do a lot of reinsurance in special risk business if they wished to play big in the oil and gas sector.

He also charged underwriters to ensure that they entered into reinsurance treaty with competent reinsurance outfits.

Fatogun, who spoke with Sweetcrude in Lagos, noted that special risk business is highly capital intensive as such, insurers should ensure that adequate reinsurance is in place because it is imperative for underwriting companies to pay claims promptly when and where the need arises.

The insurance broker also advised operators to effectively use coinsurance to pull capital and develop relevant skills such that pricing of risks could be done in Nigeria, adding that they should avoid unhealthy competition that erodes the potential profitability of the companies to participate in the sector.

Fatogun added that every oil and gas risk underwriting business must be insured by a Nigerian company for them to take what they can cover, then cede the rest to a captive company, adding that insurers are over exposing their accounts if they take too much of these special risks and exposing clients unnecessarily.

He noted that the recapitalisation exercise has increased the capital base of insurance companies and strengthened them for global competitiveness with improved capacity to underwrite insurance of oil and gas.

Fatogun called on underwriters to have reinsurance treaties with ‘A’ rated international companies to further increase their ability to underwrite special risks.