Insurers target increased capacity for local content opportunities
The nation’s insurance industry is targeting a new capacity that would enable it explore opportunities in the oil and gas sector of the economy as provided in Nigeria’s Local Content Development Act.
The sector is considering re-establishing an oil, gas and energy insurance pool to enable it mop-up resources for a major stake in the high risk oil, gas and energy business.
Although the Nigerian Local Content Development Act provides that players in the local market could access up to 70 percent of total risks emanating from the local market, as at the end of 2012, only about 30 percent of the risks are retained locally.
Gus Wiggle, the new chairman of the Nigerian Insurers Association (NIA), in his acceptance speech said one of his cardinal objectives is to fast-track the process of re-establishing the oil & gas insurance pool so that the industry can reap the full benefit of the Nigerian Content Development Act.
The pool, which is to be called Energy and Allied Insurance Pool of Nigeria (EAIPN), has the objective of enhancing the level of participation of Nigerians and Nigerian companies in the country’s oil and energy industry.
“Your Association is currently doing all within its powers to ensure that the pool commences operations without further delay, while urging companies that underwrite oil and gas energy insurance to subscribe to the pool,” Wiggle stated.
Wiggle who will be providing leadership for the Association in the next two years said he will sustain and improve on the good relationships that already exist with the regulator, NAICOM. “We will also reach out to other regulators in the financial services sector whose oversight functions impact on our business,” he stated.
Other programmes of interests according to Wiggle includes to strengthen the cordial relationship that exists with other arms of the industry such as NCRIB, ILAN, ARIAN, CIIN; enforce market discipline by encouraging peer review among member companies with a view to aligning the market practice with international best practices.
Also in the programmes of interests are plans to sustain the current effort at addressing those laws that are militating against the growth of the market for instance the Companies Income Tax Amendment Act (CITA) 2007 amongst others readily comes to mind and also increase the support for the Technical Committees of the Association with a view to realising their potential which will be harnessed for the achievement of the overall goals of the Associations.
Besides these, he expressed the appreciation of the Association on the efforts of NAICOM in promoting Microinsurance to deepen insurance penetration in Nigeria, assuring that his administration will take up the challenge by encouraging member companies to institute corporate structures that will ensure the success of the initiative.
In the 2013 financial year, the estimated volume of business underwritten by the industry was N285bn as against the 2012 figure of N247.58bn, which represents an increase of about 15 percent.
This improvement in performance the industry say could be attributed to the relative stability and sustained growth in the economy, the increasing insurance patronage of insurance services. Coupled with these factors are the innovations and improved service delivery by member companies as well as the growing confidence in the insurance system by the general public.
Modestus Anaesoronye