Sade Williams/Business a.m.
Chris Najomo, director general, Nigeria Civil Aviation Authority (NCAA), has urged insurers who cover risks in the aviation industry to ensure compliance, resilience, and alignment with global best practices.
Najomo made the call during the Civil Aviation Insurance Compliance and Financing Summit organised by the Authority recently in Lagos.
He identified challenges in this regard to include the definition of practical modalities for retaining key components of existing insurance contracts while transitioning to new frameworks. The theme of the summit was “Securing the Skies: Navigating Aviation Insurance and Aircraft Finance Safeguards”.
Other challenges are the clarity of global expectations and international best practices in policy adoption and regulatory compliance; outlining technical requirements for compliance without breaching lease or loan covenants; harmonizing aviation safety oversight with financial indemnity obligations and establishing the guidance for operationalizing reinsurance frameworks involving foreign insurers under the new addendum.
Festus Keyamo, minister of aviation and aerospace development, in a keynote address, stated that airlines must ensure full compliance and transparency in their insurance programmes; insurers must provide capacity, competitive products, and global-standard risk management, and lessors and financiers must remain confident that Nigeria provides a stable investment environment.
He also insisted that regulators must maintain alignment, operational coordination, and proactive communication.
Insurers and airline operators brainstormed at the summit on how to resolve the prevailing dilemma faced by airlines who must abide by local content policy by insuring with local insurers and also follow the directive of lessors who demand their aircraft on lease must be insured by international insurers like Lloyd’s of London.
In his presentation on “Addendum to Prudential Guidelines for Insurers and Reinsurers” Bankole Ajibola, director, inspectorate, National Insurance Commission (NAICOM), identified key issues on aircraft insurance, lessors and airlines.
The NAICOM chief also identified key issues about aircraft insurance, including maximum retention per aviation risk capped at five percent (5%) of shareholders’ funds; senior level authorization for all aviation placements; compliance with international standards, including financial strength ratings; local content requirement and 72-hour occurrence-based reporting requirement.
Osita Okonkwo, chief operating officer of United Nigeria Airlines, expressed regret that there is no capacity in Nigeria insurance market to structure, arrange, place and underwrite high levels of risk for operators, in terms of insuring large body aircraft.
According to him, this stunts the development of the insurance market in Nigeria.
He noted that Prudential Guidelines are the first step in the insurance cover process and advocated for the liberalisation of the market to make it competitive which will be good for all stakeholders and in line with the renewed agenda of the federal government that stresses on reform and liberalisation of the market for improved posterity.
Okonkwo observed that reforms in the banking sector have led to the emergence of these banks into globalised institutions, noting that this is needed in the insurance industry.
“There should be liberalisation of the insurance market for the growth of the industry,” he said.
Participants at the summit agreed that in terms of safety there is really nothing like old and new aircraft; that what is very important is maintenance.
They called on the regulators and the Ministry of Aviation to review the limit of the age of aircraft that could be accepted in Nigeria for commercial airline operation, which they placed at 22 years.
