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Nigerian airlines prefer to insure abroad – NAICOM

By on September 13, 2013

Deputy Director of the National Insurance Commission, NAICOM, Mr. Leo Akah has said that most Nigerian airlines prefer to do their aircraft insurance abroad, rather than Nigeria.

Akah who stated this at the two-day seminar on Aviation Law organised for judges and other stakeholders by the Nigerian Civil Aviation Authority, NCAA in collaboration with the Socio Economic Rights Initiative, SERI, said that most insurance companies don’t have the capacity to insure airline operators in Nigeria. Akah in his paper, “Contemporary Issues and Challenges on Aviation Insurance Disputes in Nigeria,” said that Nigerian insurance companies lack the financial wherewithal to insure aircraft in the system.

He noted that most of the global aviation insurance premium quotes still come from London, United Kingdom market while local operators act as spectators. It is a well known fact that the Nigerian law allows a minimum of five per cent insurance cover to be done locally by the airlines while the remaining 95 per cent can be done abroad, he said.

Airlines like Dana, Med-View, First Nation, Aero, Arik, IRS and others have their major insurance covers done abroad. Akah also identified lack of technical competence among insurance companies in the country and argued that most of the insurance companies refuse to train their personnel for fear of being poached by their competitors. He also said that there are very few players in the insurance sector with the knowledge of the aviation sector, which he said does not augur well for the development of the sector.

In a bid to improve the situation, Akah called for effective collaboration between NCAA and NAICOM, which he said is in line with Section 74 (1) of the NCAA Act, 2006. Besides, a UK-based aviation law expert, Mr. Eric Ogutunga, in his paper confirmed that no insurance company in Nigeria has the capacity to cover the airlines in the country.

In a bid to adequately ensure cover for the local airlines and jointly share the risk of indigenous airlines’ premium, Ogutunga called for collaboration among local insurance companies. He said, “Nigeria insurance companies are not sufficiently capitalised to bear the risk in Nigeria aviation sector. No wonder most of the airlines have their insurance based abroad.