Insurers see emerging opportunities in power, energy sector

Ongoing investments in the power and energy sectors where government’s divestment to private players have resulted to increased economic activity have been fingered as viable growth opportunities for insurance industry, analysts have said.

Analysts who spoke during an interview with BusinessDay said not only does the sector offer opportunities in the area of power generation; there is also distribution and maintenance side.

“When government divested, those government entities now came into the field and with that we are not talking about power from distribution point of view alone, we are talking about power from the generation point of view, which is where you have the engineering and gas side. And if there is disruption as result of gas shortage, there is loss of income to them. And that is why there is disruption insurance, Tola Adegbayi, executive director, Leadway Assurance said.”

She observed that when you look at the power sector, there have been a lot of seminars from investor side, capital side, regulatory side and development side without any real discuss about risk management through insurance.

So, it has become necessary that we build some knowledge and capacity not only with the underwriters but to the brokers and clients.

“Some of the challenges we are having with our clients is basically when we request for underwriting information, they don’t appreciate why we are asking for such information and they fell we are being difficult.”

So, building capacity amongst brokers and clients will help in information gathering for effective risks management of the emerging risks in this sector.

The brokers relate more directly with the clients and so equipping them with the knowledge will enhance relationship with clients. They also will use it to their own advantage so that it becomes easier to manage clients.

Sunday Thomas, director general, Nigerian Insurers Association (NIA) said acquiring relevant skills to manage the emerging risks in our economy is timely.

“You know the efforts of the present regime on power, from building new refineries as being promised to resuscitation of existing ones, and so require that insurance people prepare for these growing risks in our economy.

“It’s evident that we require the insurance preparation to cope”. Infrastructure maintenance is critical and to protect tax payers money from being wasted for replacement cost, insurance must be given a priority.”

While noting however that local insurance market may not have the required capacity to retain all the risks, Thomas observed that efforts must be made to retain as much of the risks as possible within the protection of the local content law and the rest reinsured  abroad.

We can share the risks with the rest of the world because we do not have the capacity to retain all, but importantly, we must by virtue of the local content capacity retain as much of the risk as we can, Thomas said.

Modestus  Anaesoronye