The Local Content Act 2010 gives Nigerian underwriters opportunity to underwrite 70 percent of the insurance deals in the oil and gas sector if they build the required capacity and competencies.
One of the recent initiatives is seeing Nigerian insurers taking deliberate step to revive the Nigerian Oil and Energy Insurance (POEIP) account.
The purpose of the account is to build a pool of funds and technical capacity for oil and gas underwriting to enable local underwriters participate jointly in underwriting oil and energy in Nigeria.
Participating insurance companies will pay a minimum subscription of $250,000 per line. The initial retention capacity is estimated to be $20 million.
“The pool will develop local financial capacity, achieve bulk insurance arrangement; develop technical capacity and improve local underwriting skills; provide technical underwriting information to member companies; curb capital flight by way of reinsurance premium overseas, and complete with international reinsurers and guarantee premium reduction” the committee set up by the Nigerian Insurers Association (NIA) said in its report.
“Presently, local underwriters control 30 percent of the oil and energy underwriting, 24 percent up from the 6 percent it was doing some three years ago,” Mr. Fola Daniel, Commissioner for Insurance said last month in Cairo, Egypt during the African Insurance Organisations (AIO) conference.
Just last week, at the NIA’s 42nd annual general meeting, the NIA Chairman, Mr. Remi Olowude, said the POEIP will soon commence.
Represented by his Deputy, Godwin Wiggle said it will enable underwriters maximise the nation’s comparative advantage in the oil and gas production and the initiative will assist the industry improve on its oil and gas underwriting.
He called on operators to take advantage of the opportunity offered by the initiative to build capacity in the area of oil and energy underwriting.
Giving the 2012 industry performance at the AGM, Mr. Olowude said the volume of business written by the industry in 2012 was estimated at N240 billion, as against N217.7 billion made in 2011, representing 10.24 percent growth.
Looking ahead in 2013 and beyond, he said the sector continues to grapple with problems of inadequate national infrastructure and the vicissitudes of the weather which is exposing many of the insured assets to flood and other natural hazards.
He said last year was particularly challenging for the industry.
Information from Daily Trust was used in this report.