Stakeholders Express Dissatisfaction over Poor Performance of Marine Insurance Sector

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Ugo Aliogo, Elee Nkechi, Abdulkareem Azeezat and Saheed Sakariyah

Stakeholders in the maritime insurance sector have expressed their dissatisfaction over the poor performance of the sector, stressing that with the huge potential of the sector, it stands a veritable position to contribute to the nation’s economy.

Speaking at an event organised by Nigeria Insurers Association (NIA) in conjunction with Olisa Agbakoba Legal (OAL) in Lagos yesterday, the Head Maritime Unit, OAL, Dr. Oluwole Akinyeye, said the sector is at a pivotal position to contribute significantly to the capital market through premiums from insurance cover, but the sector has failed to live up to its full potentials.

He explained that given the concern raised by the Minister of Finance, Mrs. Kemi Adeosun, at a recent insurance summit that the sector was denying the country of an annual 1.5 percent increment in gross domestic product (GDP), there is need to address the poor performance of the sector.

“It is imperative to note that the existing legislative framework either directly or indirectly impacted on the marine insurance development in Nigeria and it is therefore necessary to give consolidation to the relevant legislations wielding such influence”, he said.

Akinyeye called for the merger of insurance companies as part of efforts to address the challenges facing the sector, noting that this would allow bigger insurance companies to undertake liabilities that were previously of daunting nature.

He added that there is need to review the legislative framework governing the sector, adding the limitations identified in the existing legislation governing the sector has made it necessary to have an amendment to redress these shortcomings.

Akinyeye said: “A challenge confronting the legislative framework designed to promote the advancement of the sector is the absence of provisions to cater for certain areas. One of such areas is the failure of the insurance Act 2003 to make any provision concerning the insurance of goods to be exported out of Nigeria.

“Unlike the position of where section 67 (1) of the act provided that all imported goods must be insured with a Nigeria insurer, there is no such provision in respect of goods exported out of the country. This implies that goods exported out of Nigeria can be ‘Free on Board’ with the result that foreign insurance companies will insure such goods thereby leading to capital flight. Crude oil that is exported is a good example on free on board basis which is a loss to the sector.”

In his remarks, Nimbe Oviosu, added that if there is an economic slump, insurers are invariably mostly affected, noting that the essential issue for discussion would be to continue to provide the exquisite service delivery, “including prompt payment of claims and ensuring sustainable profitability.”