By David Akinmola, Lagos
The National Insurance Commission (NAICOM) has called on the Nigerian Civil Aviation Authority (NCAA) to embrace the Local Content Act in the insurance industry to protect the country’s economic interests.
The commission also said that if the aviation sector abides by the local content law, the development will stop capital flight, deepen the insurance business, and increase its contributions to the nation’s gross domestic product (GDP).
Commissioner for Insurance, Olusegun Omosehin, revealed this at the Chinet Aviacargo 2024 Conference in Lagos State, said airlines that insure abroad contravene the Nigerian Content Development Act and Insurance Act. Which requires that all domesticated businesses must be insured with local insurance firms due to the domiciliary of the aircraft and other assets.
Omosehin stressed that this is not an imposition, but a law and that the policy stipulates that airlines must insure through local insurance companies to meet the requirement of local content.
He noted that the risks are shared with international insurers, such as Lloyds of London.
The commissioner explained that the reality of aviation insurance is a global business risk emanating from one country’s crisscrossing borders. Many of them often end up in Lloyds of London, and this is not peculiar to Nigeria. Other countries, even risks emanating from the United States, will end up in Lloyds because they have a great appetite for aviation risks and that is why they are re-insurance,” Omosehin said.
However, Omosehin attributed the major issue with insurance in Nigeria to international politics and the dictates of financiers who own the capital.
He stated that local insurance companies have the financial competence to handle aviation-related insurance, including aircraft insurance, despite some insinuations to the contrary.
According to I don’t see why we consider this as an issue, but I think that there is a major issue around the demand of financiers who oftentimes are financing aircraft for the majority of our operators. Because they are the owners of capital, they then want to dictate where the insurance should be done. In this instance, these risks, which are the aircraft, are going to be flown in Nigeria, carrying Nigerian passengers operating Nigerian routes,” Omosehin added.
He further explained that the NAICOM is working to ensure that Nigerian insurance companies are adequately capitalised to handle aviation risks. “We are doing everything possible to ensure that our insurance companies are adequately capitalised to handle these risks. We are also working to ensure that they have the necessary expertise and capacity to handle these risks,” Omosehin said.
The NAICOM CEO also highlighted the importance of local content in the aviation sector, stating that it is crucial for the growth and development of the industry. “Local content is key to the growth and development of the aviation sector. It is important that we develop our capacity to handle these risks, rather than relying on international insurers,” Omosehin said.
In conclusion, Omosehin emphasised that NAICOM is committed to ensuring that Nigerian insurance companies are adequately capitalised and have the necessary expertise to handle aviation risks.
