By Yinka Bolarinwa

It is no longer news, that the oil and gas industry is expected by law to open more business opportunities to the Nigerian insurance industry with the new Nigerian Oil and Gas Industry Content Development (NOGICD) Act 2010.

Before the law came into being, there were several government efforts and initiatives through its several arms, for instance the NNPC-Nigerian Content Division created a policy which helped underwriters gain participative advantage in the risk/premium of International oil companies.

The National Insurance Commission (NAICOM) also ensured active implementation of relevant sections of the Insurance Act 2003 by ensuring domestic risk are retained in-country and giving approval for offshore reinsurance where necessary upon due appraisal of risks against in-country capacity, the industry regulator also provided clarified and defined local industry capacity.

These efforts have resulted in improved local insurance industry participation in the insurance portfolio of both the indigenous and international oil companies (IOCs). Although, I emphasize that as being developed by various clients is not only on capacity but on security too.

Specific Nigerian content levels

One can assert that all of these efforts have now been captured and promulgated in the NOICDA 2010 and as such a welcome development for the insurance industry as specific Nigerian Content (NC) levels measured in percentage (%) are provided in the Act.

Marine insurance 40%, Life insurance services 100%, Non-Life insurance services 70% and insurance broking services 100%. These specifics therefore show the commitment of the Act to the insurance industry without any ambiguity as to the level of domestic insurance industry participation in the oil and gas industry insurable risk exposures.

The implication for the insurance industry therefore, is for us to continually appraise the complexities of the oil and gas industry and the risks inherent in its operations and come out with workable models, capable manpower and adequately rated reinsurance facilities that can cater to the industry’s risk exposures.