By Ebere Nwoji
As the bidding process for the underwriting of the Nigerian National Petroleum Corporation (NNPC) business for the 2018/2019 financial year commences, insurance underwriters and brokers have been advised to seize the opportunity to prove their capacity.
About 600 insurance brokers and underwriters were involved in the race for the corporation’s business this year, higher that 500 bidders that took part last year.
At the opening of the bid process, the Group Managing Director NNPC, Maikanti Baru, had said through the open process which gave every interested insurance underwriter and broker the opportunity to participate, the corporation had saved as much as $30 million (N1.0800billion) premium in the last three years.
Maikanti had also said the corporation insisted on transparency in carrying out the process, adding that this had brought about positive changes in business transactions.
“The thrust of this result is transparency and openness, which has improved the chances, for new participants to participate in doing business in the sector,’’ he had said.
To this end, the President of the Nigerian Council of Registered Insurance Brokers(NCRIB) and Managing Director, Scib Insurance Brokers, Mr Shola Tinubu, stressed the need for insurers to cooperate with the NNPC.
Speaking in an chat with THISDAY, he also advised them to be flexible regarding the terms of the deal.
The NCRIB boss also said the corporation on its part should give the lead brokers more autonomy much earlier in the process, to jointly (with NNPC) control and direct the renewal activities.
“This should ordinarily commence with agreeing the renewal strategy, arranging the bidding process for local insurers, offshore reinsurance brokers and off shore insurers in that order,” he added.
According to him, the NNPC had pointed out that one of the requirements for the bid was strong corporate governance standards.
But Tinubu added: “I am not aware that the NNPC could have adduced the savings achieved to the fact that so many brokers were involved in the non-price bid process. “Whatever savings achieved on the oil assets programme are more attributable to the management and activities of the offshore reinsurance brokers as the root pricing on this type of transaction is obtained from the rear while lead local brokers traditionally add value by concluding the process locally.
“For the non-oil programme, the lead local brokers are more responsible as the pricing is obtained by them directly from the front end, at their interaction with the local insurer market.
“So it is more the brokers handling of completion between insurers that brings about efficiency in premium costs and as such savings where achieved” Tinubu said.
Although indigenous insurers have over the years been yearning for control of larger chunk of the corporation’s business, this has not happened despite the Local Content Act.
Presently, less than 30 per cent of the NNPC business is in the hands of indigenous insurers while the rest is insured with foreign firms.
Over the years, reason often adduced by the corporation for this development was low capital base.