Risk concerns push airlines’ insurance to N13bn annually

The cost of insurance in the Nigerian aviation sector has risen from N11 billion annually in 2017 to about N13 billion annually, figures released yesterday by the Airline Operators of Nigeria (AON) have shown.

According to the association, Nigeria pays the highest premium among African countries that are not at war, just as it attributed the development to the increased level of risks associated with the country’s operating environment.

However, AON attributed the increase in insurance premium globally to the Boeing 737 Max accidents.

It also said the insurance premium paid in Nigeria was about 10 per cent of the total value of each aircraft in operators’ fleet.

Ibrahim Mshelia, the chief executive officer of West Link Airline, which is based both in Ghana and Nigeria, said Wednesday that the cost of aircraft insurance premium in Nigeria might be the highest “all over,” noting that Nigeria pays higher insurance premium for aircraft than Ghana because Ghana insurance companies do not go through many brokers; so, the premium is relatively lower.

He said: “Actually we are higher all over. You pay lesser premium in Ghana than in Nigeria because of the greed of our people. But in the United States I once paid insurance premium of $60,000; but in Nigeria, they can charge you as high as $200,000.

“Ghana pays less because they don’t go through many brokers but Nigerian insurance companies are becoming more competitive so things are changing. Everything is about how you negotiate with the company.”

Nogie Meggison, the executive chairman of AON, who gave the N13 billion figure, disclosed that what Nigerian airlines pay for insurance was higher than the insurance premium paid by airline operators in Ghana, Cote d’Ivoire, Senegal and other countries in West and other parts of Africa that are not at war.

He said in Europe and the United States, airlines were paying about one per cent of insurance premium being paid in Nigeria.