Managing Director of Continental Reinsurance Plc, Dr Femi Oyetunji, has urged the Federal Government to ensure the full implementation of the local content policy in the insurance of oil and gas risks, insisting that the policy is still under-implemented.
But, Oyetunji told Sweetrude that Nigerian insurers presently insure only about 10 per cent of such risk while the rest are insured abroad.
He said that the insurance industry needs the local content policy, however, the policy is not yet in full session.
Oyetunji stated, “The big risks in the sector are all owned by multinationals with head offices in US, China and Europe. So they will be more comfortable dealing with companies from their own base.
“If the local content policy were not in place, I can assure you that most of us will not be in business now because the size of the balance sheet of some of the big global insurers would have placed them in vantage position to write everything that is there.
“Insurance business is a global thing. These overseas companies are international ‘A’ rated players so everything seems to work against African companies. Nigeria is doing well in terms of making sure that local capacities are exhausted before any risk is externalised.
“Africa is going through tough times and most African economies depend on commodities. Commodities prices be it copper, gold, or crude oil have gone down so the economies have been affected and when economies are affected you have a down turn and the first causality has always been insurance. So we have seen a lot of reduction in interest in insurance.
“We have seen asset values going down; we have also seen a new risked coming to the fore front which is risk of currency fluctuation. Nigeria has been negatively impacted.
“In fact what we see is that some of these risks are now being offered to us from outside Africa.
“But again part of the thinking is for us to know where the investments are going and when the investments are going. Are we able to be on ground to talk about insurance? And when these deals are going, for money to come in through infrastructure, insurance is tucked in somewhere in small print and we lose out.
“So there should be concerted effort from the regulatory bodies and the government too. There is a case of a big dam in Botswana financed by funds from China and 75 percent of the insurance is going to China. So we need to know when these bills are being put together so that as insurers and reinsurers, we will be there to ensure that our interests are protected,” Oyetunji stated.
He however said that insurance operators need to build solid institutions and good balance sheet, and be able to demonstrate to the insured that when there is a claim, they will be able to pay.