WITH the recent revelation by insurance marketers, Lloyd’s of London of continued failure of some Nigerian operators to fulfill their obligations of paying their premiums to the insurer regularly, some stakeholders have expressed fear that airlines are not operating with adequate insurance cover and have called for an economic audit by the regulatory authority.
Representatives of Lloyd’s of London market who were in Nigeria recently, noted that the Nigerian market is a high risk market yet the volume of business from the country is quite modestly small and airline brokers are not paying their premium.
They cautioned that in view of the fact that airlines brokers in Nigeria have in recent times failed to pay their premiums the Lloyd’s market might have no other choice than to blacklist the country which might have far-reaching consequences for the aviation industry and the country to a large extent.
According to Group Captain Ojikutu (Rtd), Chief Executive of Centurion Securities and Secretary General of industry think-tank group, Aviation Round Table (ART), the need for the economic audit that he has continuously canvassed for is as a result of things like this , as with this kind of news; it is clear that airlines care barely sustain their operations.
He retorted that in the case of any injury, major or minor, these airlines would not have resources to indemnify and compensate anyone stating that the NCAA was passive in its oversight responsibilities especially that of economic.
He said,” The latest threat coming from Lloyd of London to blacklist Nigerian domestic airlines over unpaid premium on their operations has again justified my recent call that these airlines foreign earnings in particular, be audited by the NCAA. ‘
“The threat coming from Lloyd means that these airlines are operating without adequate insurance cover; it also means that they cannot effectively sustain their operations in the event of any serious incident or accident as they would have no secured financial resources to indemnify cost of injuries or to compensate victims of airlines aircraft accident if the need arose.”
He was sad that till date the NCAA finds it difficult to compel airlines to provide compensation despite the Chicago convention stating that the call of Llyods has further shown the extent of indebtedness of the airlines.
“We need to learn lessons from previous accidents where some airlines were unable to fulfill their obligations to the victims of their airlines aircraft accident because of inadequate insurance cover. Even till today, the NCAA finds it difficult to compel these airlines to provide adequate compensation to the victims in spite of the Warsaw Convention on compensation for airlines aircraft victims.”
“The Lloyd threat has not only justified my call for auditing these airlines, it also show that the extent of their indebtedness is beyond the Nigerian borders. My call for airlines earnings audit and the Lloyd’s threat to blacklist them are wakeup calls to the NCAA to determine the level of the airlines indebtedness to the various safety services providers and ground handling services providers; banks and insurance; staff salaries and FIRS; etc. “
“The aim is to determine also if their call on government for foreign exchange can be justified where those on continental and intercontinental routes could be earning average of $500,000 on passengers ticket sales and cargo charges every week.”
“How many of the extinct airlines had paid compensation to victims of their various accidents fully in accordance with the Warsaw & the upgraded Chicago Convention? The victims or families of most of these accidents victims are not known to have received adequate compensation even when the NASS had intervened in the case of Sossoliso and ADC in 2008.”
“The problems lies with the passiveness of the NCAA in its oversight function on the economic regulations of the airlines. Why should any airline operate without adequate insurance cover? That was what the NASS discovered in the case of the ADC in 2008. There are others too which were not discovered and there are many of them today which NCAA must beam searchlight on now following the Lloyd alert.”
Also corroborating his submissions, the President ART, Elder Gabriel Olowo stated that it was important for the Director, Economic Regulation of the NCAA to update insurance cover of all the airlines immediately stating that,” Periodic Economic audit is also mandatory , I do hope someone is responsible for compliance ?”
The Airline Operators of Nigeria (AON) had blamed the situation on forex scarcity stating that the airlines say they have Naira; but that they can’t pay the premiums due to forex constraints.
The group also said a blacklist will certainly have a negative impact on the Nigerian economy arising from inability to acquire aircraft from Lessors with no insurance, total suspension of operations by airline charter and oil support helicopters, job losses, and other sectors being reinsured by Lloyds market such as oil rigs, vessels, high-rise buildings, airports and terminal buildings etc. Similarly, a downgrade or outright blacklist will mean very high premiums due to high risk levels.