Industry targets higher capacity on back of oil, energy pool

With the achievement so far of a 30 percent retention capacity on oil and gas as at the end of 2012 and the need to stem the tide of premium flight from the local market, underwriters are considering reviving its age long initiative, the Nigeria Oil and Energy Insurance Pool (NOEIP).

Though NOEIP could not stabilise when it was first initiated five years ago, they believe it will enable operators maximise the nation’s comparative advantage in the oil and gas sector.

Remi Olowude, chairman of the association’s said at its 42nd Annual General Meeting (AGM) in Lagos that the initiative will assist the industry improve on its oil and gas underwriting, calling on operators to take advantage of the opportunity offered by the initiative to build capacity in the area of oil and energy underwriting.

Olowude represented by the deputy chairman, Gus Wiggle noted that the volume of business written by the industry in 2012 was estimated at about N240 billion, as against N217.7 billion made in 2011, adding that in spite the stride, the sector continues to grapple with problems of inadequate national infrastructural facilities and the vicissitudes of the weather which exposed many of the insured assets to flood and other national hazards.

He said last year was particularly challenging for the industry, stressing however that the industry will continue to play its role of financial inter-mediation in the economy.

Sunday Thomas, director general, on his report on NOEIP said following the report of the committee set up by the National Insurance Commission (NAICOM) to look into how it can explore the provisions of the Nigerian Content Act 2010 to increase the local retention capacity in oil and gas business in Nigeria, the association’s Governing Council, through its committee, reviewed the report and recommended the resuscitation of the existing insurance pool.

He said the committee has continued to make progress in fine-turning other details required for the effective take off of the pool to enable it achieve its goals in increasing local capacity.

Members Thomas noted have been called upon to subscribe and participate in the pool for effective take off.

A risk pool is one of the forms of risk management mostly practised by insurance companies. Under this system, insurance companies come together to form a pool, which can provide protection to insurance companies against catastrophic risks such as floods, earthquakes etc.

An insurance pool comes into existence when several insurance companies share information about historic payout rates and create communal insurance funds from which high risk insurees receive payouts.

An insurance pool generally focuses on providing one type of coverage, such as oil and gas, energy, but sometimes insurance pools sell a variety of different insurance products.