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The National Insurance Commission (NAICOM) has called on the Nigerian Civil Aviation Authority (NCAA) to adhere to the Local Content Act within the insurance sector, emphasizing its importance in safeguarding Nigeria’s economic interests.
NAICOM highlighted that by complying with the local content law, the aviation sector could significantly reduce capital flight, strengthen the domestic insurance industry, and boost its contributions to the nation’s Gross Domestic Product (GDP).
Speaking at the Chinet Aviacargo 2024 Conference in Lagos, the Commissioner for Insurance, Olusegun Omosehin, underscored the importance of local insurance coverage for airlines operating within Nigeria. He pointed out that insuring aircraft abroad violates the Nigerian Content Development Act and the Insurance Act, both of which mandate that domestic businesses must secure insurance through local firms due to the domiciliation of aircraft and other assets.
Omosehin clarified that this is not merely a regulatory suggestion but a legal requirement, stating that airlines must insure with local insurance companies to comply with the local content provisions. He acknowledged that while risks are often shared with international insurers such as Lloyd’s of London, the primary insurance should be handled locally.
“The reality of aviation insurance is that it involves global business risks that cross international borders, often leading to reinsurance arrangements with global firms like Lloyd’s. However, this practice is not unique to Nigeria—similar risks from other countries, including the United States, also end up with Lloyd’s due to their significant appetite for aviation risks,” Omosehin explained.
He attributed challenges in local aviation insurance to international politics and the influence of financiers, who, as owners of capital, often dictate where insurance should be placed. Despite these external pressures, Omosehin asserted that Nigerian insurance companies possess the financial strength and capability to handle aviation-related insurance, including aircraft coverage.
“There is a misconception about the competence of local insurers, largely driven by the demands of financiers who often finance aircraft for our operators. Because they control the capital, they try to dictate where insurance should be conducted. However, these aircraft are operated in Nigeria, fly Nigerian routes, and carry Nigerian passengers,” Omosehin stated.
He further emphasized that NAICOM is committed to ensuring that Nigerian insurance companies are adequately capitalized and equipped with the necessary expertise to manage aviation risks effectively. “We are taking all necessary steps to enhance the capacity of our insurance companies, ensuring they are well-capitalized and possess the expertise needed to handle these risks,” he added.
In conclusion, Omosehin reiterated the critical role of local content in the growth and development of Nigeria’s aviation sector, urging all stakeholders to support domestic insurers. “Local content is vital for the development of the aviation industry. It is essential that we build our capacity to manage these risks independently, rather than relying on international insurers,” he affirmed.
NAICOM remains dedicated to reinforcing the capabilities of Nigerian insurance firms, ensuring they can adequately address the complexities of aviation insurance.
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