HENCEFORTH, the National Insurance Commission (NAICOM) would not permit risks to be underwritten offshore unless local capacity has been exhausted, the Commissioner for Insurance, Fola Daniel has said.Daniel, who spoke to The Guardian, said the Nigerian Oil and Gas Content Development Act 2010 desired that local insurers and reinsurers will be able to write a minimum of 45 per cent of oil risks in 2007, and 70 per cent at the end of last year, but lamented that only 33 per cent of the risks in the sector was retained locally.He attributed the development to what he called absence of an enabling law in the past to back up the policy initiatives, adding that with the coming into effect of the Local Content Act, in accordance with Insurance Act 2003 and the National Insurance Act 1997, and the release of the guidelines for oil and gas business in Nigeria, 100 per cent, 70 per cent and 40 per cent of all life, non-life and marine insurance risks in the Nigerian oil and gas industry must be placed with insurers in Nigeria.According to Daniel, 'no risk can be placed off-shore without the written approval of the Commission, which is required to ensure that Nigerian local capacity has been fully exhausted.'Local capacity shall be defined as the aggregate capacity of all Nigeria registered insurers and reinsurers which shall be fully exhausted prior to any application for approval to reinsure any Nigerian oil and gas risks overseas.'Also, the Chairman of the Nigerian Insurers Association (NIA), Mr. Olusola Ladipo-Ajayi, told The Guardian that 'we cannot achieve 70 per cent overnight, because we cannot legislate financial capacity into existence, the capacity is being built up gradually, our position has improved drastically from where we started. Our strength, knowledge base has improved tremendously. The insurance industry has benefited from all the policies, more and more insurance companies are subscribing and the experience has been very good and encouraging.'The Deputy Managing Director, African Reinsurance Corporation (AfricaRe), Mr. Ken Aghoghovbia, said there would still be the involvement of foreign underwriters, expertise would take time to grow, but like every developing market, those who need and those who provide the capacity would still need to collaborate. 'With the minimum capital requirement in Nigeria, which is the highest on the continent, we will have a lot of Nigerian insurers participating more effectively in terms of placing their capacity,' he noted.According to him: 'We must make all efforts to build capacity, because the sector drives the Nigerian economy. We need to build synergy and understand that the sector we are dealing with is highly organised and upright. The insurance industry must come together to be able to participate effectively.
Click here to read full news..
