BusinessExperts Seek Review of 5% Shareholding Funds in Aviation Insurance

Experts Seek Review of 5% Shareholding Funds in Aviation Insurance

Ask ZiVA 728x90 Ads

Stakeholders in the nation’s insurance industry have called on the National Insurance Commission (NAICOM) to review the current regulation, which limits total insurance cover for aviation at the maximum of 5 per cent shareholding funds.

As specified in the enabling law (NAICOM Act 1997), the commission has the mandate to establish standards for the conduct of insurance business in Nigeria; approve rates of insurance premiums to be paid in respect of all classes of insurance business; ensure adequate protection of strategic government assets and other properties amongst others.

The players in the industry emphasised that the review the of 5 per cent shareholding funds would spur growth in the Nigeria aviation industry, while also increasing economic activities in the country.

Glo

They made the call at an Aviation and Cargo Conference in Lagos with the theme: ‘The Role of Insurance Regulation in the Growing Aviation and Cargo Business in Nigeria’.

Aviation insurance is considered as a special risk and the premium is said to be high because of the high risk associated with the business.

In their various presentations at the conference, the insurance experts said, the limited insurance cover for the sector as stipulated in the law should be given a second thought.

The Director, Policy and Regulation, National Insurance Commission (NAICOM), Mr. Leo Aka, who represented the Chief Executive Officer of the Commission, Mr. Thomas Olorundare Sunday for more capital injection to enable more local retention and licensing of more local reinsurers to address some of the major challenges facing aviation insurance in Nigeria.

These he listed to include, sabotaging local content Act requirements, accusation of high premium rates, Airline Operators of Nigeria (AON) and nature of reinsurance cover among others.

“We have had experience in the past where there were claims and the reinsurer abroad could not pay, we also prescribe how much you can take in aviation because of the risky nature. The highest you can take in terms of shareholders fund, you can’t take more than 5%, all these are to protect you”.

Managing Director of one of the insurance companies Mr. Edeki Isujeh raised the issue of access to the dollar for the payment of premium and called on the insurance regulator to liaise with the Central Bank of Nigeria for a special window.

“We have some players in the industry who will you they don’t have the dollar to pay their premium and what they have is naira that is a challenge for the insurance industry, where do you source the dollar from?”.

Another insurance expert, Mr Shola Ajibade, called for frequent communication between aviation stakeholders and the insurance companies to discuss their challenges.

“But the reinsurance side is not domiciled in Nigeria. It is worldwide. You need to be part of those things and there has to be consultation, wide consultation of the stakeholders”.

The organiser of the conference, Mr Ikechi Uko, said the event is meant to bring together airline operators and the Insurance companies to address the growing perception of exploitation of airlines by Nigerian insurance companies and the alleged use of the law to prevent them from using foreign insurers when they lack adequate capacity to insure a brand new aircraft but still charge high premium.

Meanwhile, aviation insurance is critical to the smooth running of all aviation businesses. This type of insurance coverage is geared specifically to the operation of aircraft and the risks involved in aviation.

Aviation insurance policies are however, distinctly different from those for other areas of transportation and tend to incorporate aviation terminology, as well as terminology, limits and clauses specific to aviation insurance.

In addition, it provides coverage for hull losses and liability for passenger injuries, environmental and third-party damage caused by aircraft accidents

For effectiveness, Aviation insurance has been divided into several types of insurance coverage available. They include Public liability insurance, often referred to as third party liability which covers aircraft owners for damage that their aircraft does to third party property, such as houses, cars, crops, airport facilities and other aircraft struck in a collision.

It does not provide coverage for damage to the insured aircraft itself or coverage for passengers injured on the insured aircraft.

Others are Passenger Liability Insurance, Combined Single Limit (CSL), Ground Risk Hull Insurance Not In Motion, Ground Risk Hull Insurance In Motion and In-flight Insurance.

About the Author

Homepage | Recent Posts

Anthony Awunor, is a business correspondent who holds a Bachelor of Arts Degree in Linguistics (UNILAG). He is also an alumnus of the Nigerian College of Aviation Technology (NCAT), Zaria Kaduna State. He lives in Lagos.

Anthony Awunor, THEWILLhttps://thewillnews.com
Anthony Awunor, is a business correspondent who holds a Bachelor of Arts Degree in Linguistics (UNILAG). He is also an alumnus of the Nigerian College of Aviation Technology (NCAT), Zaria Kaduna State. He lives in Lagos.

4 COMMENTS

More like this
Related

Tinubu Appoints Abdullahi Bello New Chairman Of Code Of Conduct Bureau

March 28, (THEWILL)- President Bola Tinubu has approved the...

First Lady Remi Tinubu Pledges N1bn To Fight Tuberculosis In Nigeria

March 28, (THEWILL)- Nigeria's First Lady, Senator Oluremi Tinubu,...