Patience SAGHANA
For insurance industry to actively and effectively enjoy the benefits of the Nigerian local content Act 2010, companies in the sector have been asked to fruitfully engage themselves in the various levels of the high risk business.

Mr Solanke Ogunlana of Scrib Insurance Brokers said this in a paper titled, ‘Strategies for Optimizing the Opportunities in the Nigeria Oil & Gas Content Development Act 2010’ which he delivered at the industry’s one-day seminar on oil and gas insurance in Lagos.

According to him, “There should be constructive stakeholders engagement at various levels. This is one of the first strategies that should be deployed. Some would argue that a lack of cohesion exists within our industry or that there is an absence of unity of purpose”.

The objective of  the need for the sector to strategise  constructively, Ogunalana  elucidated, is to facilitate a workable, practical and desirable solution for all stakeholders including  the insureds, insurers, reinsurers, local & foreign etc alongside industry trade groups and National Insurance Commission (NAICOM);

National Petroleum Investment Management Services  (NAPIMS); Nigerian Content Development and Monitoring Board (NCDMB) and the government to ensure that the opportunities created by the Act are optimised by satisfying the purchasers of insurance; satisfying and saturating the local sellers of insurance and simultaneously engaging the global insurance market as and when necessary.

On this part, Mr Kunle Omilani Managing Director, Y.O.A Insurance Brokers Limited
Under Section 50 of the Act, the commission can only issue a written approval before any insurable risk emanating from the Nigerian oil and gas industry is placed offshore.

And for the regulatory body to do that, NAICOM must ensure that the nation’s insurance industry capacity has been fully exhausted.

He said, “With the restructuring of the Nigerian oil and gas industry where third party funding will be secured for oil and gas projects, the loan agreements usually specify that insurance must be placed with A-rated insurance security.

Omilani argued that the insurance regulatory should find a way of reducing the stiffness in the rating requirement in the overall interest of the local companies. “This scenario must be addressed under the guidelines as no Nigerian insurance company currently satisfies this requirement”.

For insurance operators to play a major role as availed by the Act, he adviced that they must carry out their businesses with established standards and best practice.

He reiterated, “Operators tend to insure their oil and gas interests around the world with A-rated insurance security issued by an internationally recognised credit rating agency such as AM Best or Standard & Poor.

There is no Nigerian insurance company that satisfies this requirement and an alternative approach that will comply with the Act and be acceptable to operators will have to be formulated”.

“It is imperative that the requirements specified in the guidelines are met by all Nigerian insurance professionals. They should adopt and implement best practices and should not expect to participate in oil and gas insurance when they have not satisfied the minimum requirements under the guidelines”.

The insurance broker stated, “It is important to note that NAICOM regulates the insurance industry in the best interest of the insuring public, which does not exclude oil and gas operators. It is therefore critical that NAICOM and the NCD board benefit not only from the feedback from insurance professionals but also from operators