Insurance sector operators, have urged the federal government to collaborate with the Central Bank of Nigeria ( CBN) to create what they described as special-forex-assessment policy for airline operators to enable them pay premium to their foreign reinsurers on a regular bases.
The operators, also raised the alarm that some airline operators in Nigeria especially private aircraft owners fly without adequate insurance arrangement especially challenging aviation ministry and its allied agencies to wake up and bring such offenders to book for punishment.
The operators spoke against recent traits by the global reinsurance giant Lloyd’s of London that it will delist Nigerian Airline operators from its reinsurance cover on account of irregular premium payment.
The operators said since the airline operators’ failure to meet their foreign reinsurance obligation was attributed to forex constraints as indicated by the chairman, Association of Airline operators of Nigeria (AON), Sir Nogie Meggison, the government should give them special consideration in its present forex policy.
Managing Director, Mutual Benefit Assurance Plc Segun Omosehin, speaking to THISDAY on the issue said considering the fact that aviation is a very critical sector and the fact that aviation insurance is a very critical issue, which if not in place, means the aircraft cannot fly, government should give the sector special consideration by making discriminatory forex policy for them.
He said this has become necessary because local reinsurers cannot provide all the cover that the airline operates need.
According to him, “aviation risk is huge, domestic insurers and reinsurers retain only 5 percent or 2. 5 percent of their shareholders’ funds.
Aviation risks are major risks most domestic reinsurers cannot take it, therefore, if reinsurers like Lloyd’s reject them, it means they cannot fly”.
on the other hand, he said most aircrafts are leased, therefore the airline operators should make haste and talk to their foreign financiers to pay on their behalf.
The Mutual Benefit boss, also said government needs to release funds and come to their aid so that aviation sector will be safe.
On the implication of the proposed delisting, for underwriters, he said for underwriters, if it happens, there will be drop in premium from aviation line of business because aviation line of business is a huge source of premium. Therefore, if the Foreign reinsurers take such action, it will lead to reduction of income rolling from the business line which will also lead to drop on the contribution of insurance to the GDP.
The government should have special arrangement with CBN for them to source forex. Aviation is a critical sector, therefore, government should consider them in policy making”‘ he stated.
Speaking, Managing Director, Boof Africa Insurance Brokers,Olumide Fatagun, said issue of irregular payment of premium to foreign insurers and reinsurers by Nigerian airline operators should not be blamed on any broker rather should be blamed on the operators themselves.
He said this is because Nigerian insurance industry is in the era of ‘no premium no cover’, therefore no broker holds any premium paid to him any longer.
“In any class, whether aviation or not, the rule is no premium no cover the rules and regulation that support it from NAICOM is very stringent. The 30 days grace is no longer tenable because NAICOM needs periodic return.
He spoke on the general poor attitude of airline operators towards insurance premium payment saying, most of aircrafts flying in this country are probably flying without cover.Some years back, it was discovered that the aircraft used by the presidency fly without insurance cover.
A lot of risks are taken in Nigeria, the ministry of aviation should wake up, because that is why we have agency like NCAA that is why some victims of air crash are not compensated. Our government is just playing to the gallery, they Should confirm from insurers whether each aircraft that flies have insurance and pay premium adequately”, he stated.