The National Insurance Commission (NAICOM) has said that the country's insurance sector has the capacity and professional competence to provide coverage to the aviation sector.
Mr Olusegun Omosehin, CEO of NAICOM, said this at the 4th CHINET Aviacargo Conference held last week in Lagos, according to local media reports. He was rebutting talk that the Nigerian insurance industry lacks the capacity to underwrite risks in the aviation sector, including aircraft.
He said, “Notwithstanding the international nature of aviation business and insurance operations, professionals in the country where the subject matter of insurance is situated cannot be ignored in profiling of the risk.”
He added that the insurance sector was, therefore, best fit to understand the patterns, behaviours, and risk profiles of the various sectors, in the best interest of the insuring public and businesses in Nigeria, with support from reinsurers.
He also said that Nigerian law permits only Nigerian insurers to provide the coverage.
He pointed out that the capacity of insurers is measured by what they have in addition to reinsurance support. He said that NAICOM’s prudential regulations stipulate the minimum standards for underwriting, reinsurance, investments, reserving, and outsourcing, including for the aviation insurance branch.
Mr Omosehin pointed out that the high capital-intensive nature of aviation has made insurers very careful about underwriting risks in the branch.
He said that aviation insurance is a global business risk emanating from one country crisscrossing borders. Much of the business ends up at Lloyd’s of London.
He added, “Every January, we review the reinsurance treaties of every underwriter in this market to ensure they meet with international standards and it is on that basis that we approve their treaties before they are allowed to operate.”