Nigerian insurers were unable to utilise the 70 per cent local content capacity allotted to them through the Local Content Act, retaining only 19.2 per cent in 2019, Naija247news understand.
The indigenous insurers were only able to retain 10.8 per cent out of the 70 per cent, losing 50.8 per cent business to their foreign counterparts.
In all, out of the 100 per cent insurance business mainly from the oil and gas sector, Nigerian insurance firms were only able to retain 19.2 per cent, losing 80.8 per cent of the foreign firms.
The Local Content Act provides exclusive consideration for indigenous service companies, which demonstrate ownership of equipment, Nigerian personnel and capacity to execute jobs in the oil and gas industry.
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Speaking on the challenges of capacity in the industry, the Acting Commissioner, National Insurance Commission (NAICOM), Mr. Sunday Thomas, said the Commission had last year initiated the recapitalisation of the industry to ensure that it becomes more robust in its technical competence and financial base, build confidence, trust and enhance market value.
He said the commission also planned to upscale its financial standing to meet up with the economic realities and avoid imminent systemic collapse and solvency crisis in the sector.
When the Local Content Act was accented to by the President on April 2, 2010, many insurers hailed it as one of the significant developments in localising management and control of the oil and gas industry for the insurance industry.
Unfortunately, 10 years after, the indigenous firms are yet to attain the needed capacity to carry 70 per cent of the big risks business, leading to not only huge capital flight from the economy, but also lower risk retention capacity and inability to insure the big risks.