NIA, NCRIB canvass legislative support for local content
Released on 09 Apr 2009
IN an effort to ensure that the Nigerian insurance market derive maximum benefit from the Federal Government's local content policy on oil and energy insurance, the Nigerian Insurers Association (NIA) and the Nigerian Council of Registered Insurance Brokers (NCRIB) took their campaign to the House of Representatives Committee on local content for legislative support for the industry.
The President of the NCRIB, Chief Dede Ijere, told The Guardian that the NIA and NCRIB made joint representation to the committee recently at Abuja on behalf of the industry for legislative support to enforce the government's initiative on local content on insurance.
Under the government policy initiative, the Nigerian insurance companies would be expected to participate and underwrite at least 45 per cent of oil and energy business emanating from the country by 2006 and to increase to 70 per cent by 2010.
The NCRIB boss said: "A committee made up of NIA and NCRIB members made joint representation to the House committee on local content on behalf of the industry for a legislation that will enforce the government initiative in the insurance of this risks.
"We presented one voice to the committee and this is the first time that the two market groups have been able to come to a consensus on such an important issue that affects the industry."
Also, in support of the Nigerian content policy of the government, the National Insurance Commission (NAICOM) recently issued guidelines in respect of consortium bidding in the insurance of oil and Energy risks in Nigeria, to assist local underwriting companies to participate.
In the guidelines, for instance, consortium leaders must have a minimum net assets not less than N6 billion, member of any consortium must have a minimum net asset of N4 billion, while company willing to bid alone must have a minimum net assets of N10 billion.
Industry sources agree that the need to back up the government local content directives with legislative stamp will reduce huddles put up by interest groups to frustrate local participation, but assist local underwriting companies to gradually build capacity to participate in the business.
Said the source: "Huddles put up by the Nigerian National Petroleum Corporation (NNPC), multinational oil companies, who insist on doing business with their captive outlets off-shore and the cartel of local insurance companies and brokers in the NNPC Consolidated Insurance Premium (CIP) account, who wants to maintain the status quo are major threats to the success of the policy which the legislators need to address."
According to him: "The threats to local underwriting companies participation in the oil and energy sector and generate capacity is real. Inspite of the last recapitalisation exercise in the insurance industry, oil and energy risk are still substantially being placed off-shore. The industry is confronted with all forms of huddles hindering us from full participation in the oil and gas risks.
"What is most worrisome is the fact that few local insurance companies and brokers who have benefited over the years in the CIP accounts are seriously opposed to the consortium bidding because of their selfish interest against the interest of the industry.
Over the years, they have been fronting for their principals in taking the risks off-shore, in return received huge commission in dollars."
The multinational oil companies operating in the country, he said, had their captive insurance companies established to capture premiums from their operations across the globe.
These are the problems which we hope the House Committee would address so that the governments directives on the local content policy can be realised, he said.
