Insurance: NAICOM Releases Oil And Gas Guidelines
By Sunday Ojeme
 15th JAN 2007

Beginning from Monday (tomorrow) insurance companies registered in Nigeria will be able take full advantage of the 45 per cent local content largesse provided for by the Federal Government.

The development is sequel to the release of official release of the guidelines, which will shape the operators’ participation in the lucrative oil and gas industry.

The Federal Government, while announcing the new capital base for industry operators, had made it clear that insurance companies registered in the country would compulsorily underwrite 45 per cent of the local content operations in the country. Emphasis was laid in oil and gas in this regard because of the attitude of the operators who brought insurance abroad.

At various forums, the managing directors of insurance companies had expressed optimism that the future of the underwriting business in the country would experience a boom especially with the new consciousness and involvement in oil and gas.

Giving highlights on the benefits, the Managing Director, Sovereign Trust Insurance Plc, Mr. Seun Ajayi, said the future of the insurance business in the country was bright, especially with the government’s enforcement of 45 per cent local content policy in the oil and gas industry, which will significantly boost insurance income.

He said, “Over $400 million is expected to be generated as insurance premiums by the industry in the next two years. This transformation will not just increase the fortunes of insurance business but will also throw up new scenarios and opportunities”.

Presenting the guidelines to the operators on Friday in Lagos, the Commissioner for Insurance, Chief Emmanuel Chukwulozie, said the issue of local content, especially in the oil and gas industry had been tackled frontally with a committee of relevant stakeholders put in place to work out the guidelines.

He said all the stakeholders including the Nigerian National Petroleum Corporation worked with diligence and sincerity of purpose in the discussion that led to a consensus of opinion that gave birth to the guidelines.

According to the guidelines, which were drawn from Section 72 of the Insurance Act 2003, the arrangement of insurance for the oil and gas operations associated in any capacity shall be conducted in accordance with the provisions of the law as contained in sections 3, 36, 43, 45 and 72 of the Insurance Act 2003.

It stated further that the appointment of an overseas reinsurance broker shall be made by the lead co-insurer or a broker duly registered under the Act in consultation with the insured. Overseas reinsurance brokers shall work in collaboration with reinsurance brokers registered under the Act.

Chukwulozie said with regard to the guidelines, NAICOM’s verified gross underwriting capacity of Nigerian registered insurance companies must be fully utilised to the satisfaction of NAICOM to maximise Nigerian content before ceding risk offshore.

Source: Punch

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