By Rosemary Onuoha
INSURANCE firms have expressed apathy to underwriting oil and gas risks thus undermining efforts by National Insurance Commission, NAICOM, to ensure that local capacity is exhausted before oil and gas risks are taken abroad.
Financial Vanguard investigation reveal that the apathy of the firms was borne out of fear that claims emanating from such risks could impact negatively on their balance sheet or out-rightly wipe out their capital. Consequently, such companies have concentrated more on small businesses especially third party motor insurance.
The constant refusal by insurance companies, especially the fringe players, to partly underwrite big risks, have been a source of worry to NAICOM, forcing the regulator to subtly persuade some of them to submit themselves for mergers and acquisition.
Recall that NAICOM has expressed concern over practices in which insurance practitioners fail, neglect or refuse to consider and fully utilize relevant in-country capacities of insurance/reinsurance institutions such as pools, reinsurers and other approved local/recognised insurance capacities, prior to applying for approval to cede certain proportion of some risks offshore.
NAICOM had stated: “All insurance institutions are required to ensure that Nigerian insurers, reinsurers and pools, in the Commission’s records, must be offered and allowed to willingly decide the proportion of the risk they wish to accept, subject to their respective capacities, before any application for approval for offshore placement of the excess.
“All recognised reinsurance treaties/arrangements and additional capacities offered by local reinsurers/pools must be fully utilized before excess consideration for offshore placements. All off-the-system or informal directives to co-insurers, local reinsurers and pools to accept lower than their desired available capacities are prohibited.”