Oil and gas insurance: ‘FG should provide financial backing’



By Agency Reporter   Thursday, 9 Sep 2010


The Managing Director, Afribank Insurance Brokers Limited, Mr. Pascal Egeru, says insurance operators need government‘s financial backing.


Egeru told the News Agency of Nigeria in Lagos on Wednesday that the lifeline given the banking and manufacturing sectors should be extended to insurance operators.


According to him, such a bail-out will help brokers to build up their financial muscle to underwrite oil and gas insurance, thereby enabling the industry to realise the full potential of the Nigerian Oil and Gas Development Act 2010.


He said, “The government can help the insurance industry by providing financial backing and allowing brokers to use the fund for between two to three years to do business.


“This will help brokers accumulate the needed capacity to make up for the deficiency in the industry.”


Egeru said that insurance was an international business, which allowed operators to take an aspect it had capacity to take and distribute others.


He said that there were also the reinsurance treaties and co-insurance mechanisms.


He said that without the Federal Government’s financial backing, local operators would only take the aspect they could take and continue to divert the larger portfolios to foreign insurers.


Egeru noted that the insurance industry “moves in circles of hard and soft periods and Nigeria has continued to be in the soft period because it has not had catastrophes.”


He warned that irrespective of the Nigerian Oil and Gas Development Content Act, the insurance industry in Nigeria was entering a situation where it might not be able to underwrite a huge policy.


The Chairman, Nigerian Council of Registered Insurance Brokers, Port Harcourt Area Committee, Mr. Dele Kareem, said there should be a set rule binding foreign investors to insure their local assets with local insurance companies.


He said, “You will find out that in the event of marketing and interacting with these multinationals, our local insurance companies are not protected, in spite of the local content, they will tell you they have insured all their assets globally.”


Source: The Punch



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