Insurance firms have ceded businesses worth $115.74 million (about N41.7billion) abroad because of lack of financial and technical capacity, a report by the National Insurance Commission (NAICOM) has shown.
A breakdown of the lost deals include business of 11 multinationals and local firms abroad, holding only $45 million. This indicates that the firms ceded 72 per cent insurance business abroad. The development is against the implementation of the Local Content Law in the country.
The total sum insured of the 11firms, however, amounts to $160.7 million.
The commission’s Director, Policy and Regulation, Mr Pius Agboola, quoted the report to buttress the need for the industry’s recapitalisation policy at a seminar held for reporters in Ijebu-Ode, Ogun State.
Of the multinationals in the report, the Nigerian National Petroleum Corporation (NNPC), Chevron Nigeria Limited and Mobil Production Nigeria Limited’s business were the highest risks at 78 per cent, 75 per cent and 70 per cent.
The breakdown of the report showed that NNPC’s type of risk, Consolidated Insurance Package of $99.58 billion sum insured, was shared at 78 per cent locally and 22 per cent abroad, amounting to $77.67 billion local and $21.91 billion abroad.
Chevron Nigeria Limited’s type of risk, Energy Package Insurance sum insured stood at $14.31 billion with $10.73billion placed locally, and $3.57 billion abroad; Mobil Production NigeriaLimited, Energy Package/Physical Damage and O.E.E, sum insured stands at $14.09billion, $9.86 billion locally, $4.23 billion abroad; Lafarge HOICIM, Combined Property Damage/Business Interruption and Public Liability sum insured stood at$564.88 billion with $388.24 billion placed locally and $176.64 billion abroad.
Also, Dangote Fertiliser,Construction/Erection, all risks and third party liability sum insured stands at $1.12 billion with $0.672 billion placed locally and $0.44 billion abroad; Sahara Power (Egbin Power Plc) (Combined Property Damage/MachineryBreakdown/Liability Terrorism/Political Violence cover Policy $3.17billion;$1.43billion, $1.74billion
Hinson Production (Energy Package (Warand Terrorism Inclusive) $1.2billion, $484.8 million, $715.2 million. StarDeepWater Petroleum Limited (Energy Package) $3 billion, $2.25 billion, $750million. Dangote Refinery (Construction/Erection all risks,third party liability, Owners Plant Delay in Startups) $6.7 billion, $1.54 billion, $5.16billion
Aviation Refueling, refueling Liability Insurance) $1 billion, $103million, $897 million and Centre forEnergy Research and Trainings Affiliated to Ahmadu Bello University (ThirdParty Nuclear Liability Insurance $7.01billion, $3.01 million and $6.97billion.
The Acting Commissioner for Insurance, Mr. Sunday Thomas stated that the recapitalisation by the commission would lead to a boost in the system. He said the capital base of an underwriter is important.
He noted that a large proportion of the local risks was ceded because of low retention capacity, hence the increase in capital base would increase the retention capacity of the underwriters.