Thursday, 19 August 2010 00:00 By Joshua Nse

 

THE nation’s insurance industry must come together and harmonise strategies to actualise the objectives and challenges in the Nigeria Oil and Gas Development Act 2010.

At a one-day seminar in Lagos on “Nigeria oil and gas Development Act 2010”, jointly organised by industry regulatory authority and Chartered Insurance Institute of Nigeria (CIIN),stakeholders agreed that with the coming into effect of this legislation, operators have no excuse, but to collaborate with the National Insurance Commission (NAICOM) to underwrite 100, 70 and 40 per cent of all life, non-life and marine insurance risks in the Nigeria oil and gas industry, and no risk must be placed off-shore without the written approval of the Commission in order to ensure that Nigerian local capacity is fully exhausted.

The Executive Secretary, Nigerian Content Monitoring Board (NCDMB), Mr. Ernest Nwapa, in his remark commended NAICOM for bringing together the various groups to have this kind of united front, realising the economic importance of the legislation to the growth of the insurance industry in Nigeria.

 

Therefore, he said all stakeholders must rise up to the challenges now that there is a law to regulate operations in the local content policy, bearing in mind that insurance is very important in the oil and gas business. “We must realise that what is on ground goes beyond earning premium, but providing protection to the risk in the oil and gas sector”.

There is enough business in the oil and gas sector, he said, but we have to pay close attention to the policy of government and make long term plans to actualize the objectives of the Nigerian Content Act.

Professor Joe Irukwu said that  the industry will go no where unless we work together as one industry determined to make a success of our efforts as professional risk bearers. We require a robust united insurance industry in order to reap true benefits of this very important landmark legislation.

His words “We understand the spirit and objectives of this important deliberation as well as its benefits to the Nigerian insurance industry and to our national economy. The Nigeria Oil and Gas Local Content Development Act 2010, which has recently been passed into law by the National Assembly, assented to by the President, made some very important provisions to promote the local retention capacity of marine, life and non-life insurance services in the context of the Nigerian oil and gas industry.

“To this end, the Act provides for 40 per cent and 100 per cent minimum retention of all non-life and life insurance services in the Nigerian oil and gas industry. In view of the fact that the oil and gas industry represents the most dominant aspect of our national economy today, it is evident that this landmark legislation when it is fully implemented, will revolutionalise our national premium volume as well as the level of insurance funds controlled by the Nigerian insurance industry, and it is our responsibility to achieve that very vital point”.

Undoubtedly, he said, the Nigeria Oil and Gas Local Content Development Act 2010 is the result of several decades of efforts by the government and stakeholders to ensure that the industry provides local values and benefits to Nigerians. For almost 50 years since the discovery of oil in Nigeria the petroleum industry has functioned almost like an enclaved economy with very limited contribution to the wider Nigerian economy, to the extent that well over 60 per cent of work value in the industry were being executed outside the nation’s shores. This situation also applies to such service industry like insurance and reinsurance.

The final objective of this Act, he said, is to correct this very unsatisfactory situation. We all have our sacred duty to ensure the full implementation of the provisions of this very important landmark legislation, be it like the (Cabotage) Act, is the desire to promote the indigenous industries in Nigeria.  

  
Said he “Government initiative is found in the legislative framework for the insurance industry to benefit in this legislation. It is now up to those of us who are active players in the industry to work with the National Insurance Commission, to ensure the full implementation of the provisions of this important legislation to the benefit of the people and the national economy”.

Besides, NAICOM has stated its determination to enforce the local content law in the insurance industry and would not permit risks to be underwritten off-shore unless local capacity has been exhausted.

The Commissioner for Insurance, Mr. Fola Daniel, disclosed the Commission’s plan in Lagos recently, while revealing the enhanced capacity of local operators to underwrite larger businesses, even in the oil and gas sector.

He said the Nigeria Oil and Gas Content Development Act 2010, desired that local insurers and reinsurers will be able to write a minimum of 45 per cent of oil risks in 2007, and 70 per cent at the end of 2010, but lamented that only 33 per cent of the risks in the sector was retained locally.

He attributed it to the absence of an enabling law to back up the policy, adding with the coming into effect of the Local Content Act, 100 per cent, 70 per cent and 40 per cent of all life, non-life and marine insurance risks in the Nigeria oil and gas industry must be placed with insurers in Nigeria and no risk can be placed off-shore without the written approval of NAICOM which is required to ensure that Nigerian local capacity has been fully exhausted.

 

Source: Guardian