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How Nigerian insurance companies rip off airlines- Investigation

 ANTHONY OMOH

 Nigerian Flight Deck investigations have revealed how insurance companies in Nigeria over the years have unjustly profiteered  off airlines and steadily rock the capital base of the latter’s businesses with over bloated insurance premium.
Our reporter learnt that these insurance companies, under the regulation of the National Insurance Commission (NAICOM) have over the years been charging Nigerian domestic carriers above five times the globally offered premium  rate as insurance brokers, only to re-insure with the major underwriters abroad.
This move is to the detriment of these airlines already saddled with multiple taxation or debts all over.
Insurance companies in Nigeria do not have the capacity to underwrite any risk undertaken in the aviation industry on aircraft and so they act as middle men and re-insure with major underwriters like Lloyds of London, Allianz Aviation Insurance and Aerospace Insurance and a host of others who have the capacity to handle this.

Commissioner of Insurance: Fola daniel

Nigerian Flight Deck gathered from a reliable source that an aircraft valued for about US$10 million can be insured (for that valued with crew and 3rd party liability suitable for Europe) in the United States of America, Great Britain or even the Barbados for between US$ 80,000 and US$100,000 as annual premium. 
However, insurance companies in the country because of certain policies enacted are capitalising on the need for them to broker for the airlines to charge them between US$300,000 and US$600,000 for just about $10 million value aircraft or as the case may be only to turn around and then pay the underwriters what is globally due, profiteering from the airlines.
Our reporter also learnt from a source in NAICOM that all the insurance companies put together in Nigeria cannot underwrite the risk of an aircraft if there is an accident, hence the question, why are they profiteering of airlines and underwriters.
The source who pleaded anonymity said,” These people are not underwriters, they cannot underwrite an accident in this industry, they don’t have the capacity as they are just brokers. All they do is collect so much money over five to ten times of the internationally known cost and re-insure with Lloyd’s and others”
“These middle men are making business tough. We reject this in totality as enough is enough! We need immediate change so we can remove the impediment and get insured anywhere else cheaper for us, if the NCAA can stand up for a cause this should be it because once we get insurance cheaper, they will reduce their premiums.”

Further more, as a category 1 civil aviation, Nigeria is supposed to be one of the low risk countries and this should reduce premium further and not hike it over and above global standard as has been the case in Nigeria for these long unfortunate years.
“What kind of risks are you talking about? Nigeria is Category One therefore a low risk country and one of the advantages of being Category One is the reduced insurance premium and since we are low risk to the international community why would our own country fleece us?”The source said.
“ If our premium go down in Nigeria even foreigners will come and insure here so there should be no border limit to insurance as there are none else where in aviation. Since it is an international business, it is callous for them to impose that Nigeria operators seek insurance only in Nigeria, they should leave the airlines alone to their choice as the counterparts world over. “
“It should be a matter of choice and not compulsion as being practiced today. Especially as the use of local insurance brokers is not competitive and over 5 times inflated for that matter. Operator have rights to use local or foreign ones,” he said, and these rights should be freely exercised by the operators.
He urged NCAA to maintain neutrality and commended same for their efforts to assist operators carry out their role to society civilly and safely.
Another operator calls on Government to call the NAICOM to order by asking it to caution its members to desist from this embarrassing and unholy behaviour. He also enjoins all operators to stand firm and resolute against this shameless exploitation.
You cannot force a man to buy your goods because he is your neighbour when your goods sale far less in the next street, it’s duty of government to also ensure no citizen or organisation imposes its values on others because they have people in government to enacted deceitful laws such as this one in question; forcing price down the throat of airlines.
A late response from the Spokes person of NAICOM, debunked the airlines claim stating,”Both NAICOM and NCAA have investigated this allegation in the past.  There is no fact to substantiate it. We have asked the AON to provide evidence, but they have not. “
Our reporter however hopes to seek NCAA’s official position on this as it is an ongoing report.

About anthony omoh

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I am a Journalist with a passion for developmental stories and nigerianflightdeck.com was born out of passion for reporting the travel, business and aviation sub-sector. This site is an expression of my ideals and creativity as a reporter and my discretion as a publisher. I am extremely content doing this and I am sure when you read my stories you’d understand that I touch people and that’s why

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