Oil & gas insurance: Local retention rises by over 400% – NAICOM

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NAICOMContrary to insinuations that objectives of the Local Content policy in the insurance industry, were yet to be achieved, the National Insurance Commission (NAICOM) has said that the local retention in oil and gas insurance business in the country rose by over 400 per cent in the last three years.

The Commissioner for Insurance, Mr. Fola Daniel who disclosed this recently explained that what some critics regarded as leakages in oil and gas insurance business was the outcome of the gradual development of both human and technical capacity for the business.

“The capacity in oil and gas cannot be built overnight, we have a semblance of financial capacity but we don’t have human capacity. So what you call leakages in the developmental thing is gradual. Three years ago, the entire retention capacity of the entire Nigerian market was less than 6 per cent but now it is inching towards over 30 per cent. We are making very good progress.

“I commend those who do not know, who are saying well, the law has given you 70 per cent why are you not doing 70 per cent.

What you eat you vomit, if we take more than we can cough out it will sink the market. So we really need to be sensible in the absorption of 70 per cent as prescribed by the Nigerian Content Act, 2010,” Daniel said.

An insurance expert, Dan Okehi recently drew the attention of Federal Government and other stakeholders in the insurance industry to the fact the country was still losing billions of Naira in premium income ceded to foreign insurers illegally.

According to him, these losses were being sustained by various malpractices perpetrated by a few greedy local insurers who front for foreign insurance and reinsurance companies in return for over-riding commissions.

“The local content policy in oil and gas business was meant to boost premium income and build capacity in the insurance industry like other sectors. Unfortunately, it is only the insurance industry that has not benefited much from the local content policy.

“This is because of the selfishness of some operators and lack of knowledge of the insurance scheme and how to place the risks internationally and how to obtain reinsurance package that will give them leverage to operator,” he said.

 

Information from the Sun News was used in this report.