Local insurers lose N44b to foreign firms, NAICOM cites low investment in sector
By Jeph Ajobaju, Chief Copy Editor
Nigerian insurers ceded about N81.8 billion to overseas insurers in 2022 instead of N37.8 billion as provided by the local content law on oil and gas insurance.
The law stipulates 70 per cent of total premium on oil and gas insurance be undertaken by Nigerian insurance firms and their foreign counterparts get 30 per cent.
But National Insurance Commission (NAICOM) data shows actual underwriting by local firms was 35 per cent in 2022, which translated to N43.9 billion out of a total N125.7 billion premium, foreign insurers took 65 per cent or N81.8 billion, per reporting by Vanguard.
In the first quarter of 2022 (Q1 2022), oil and gas premium stood at N50.2 billion, with a total N25.2 billion or about 50 per cent transferred to foreign companies.
In Q2 2022, premium in the sector dipped to N21 billion, but ceding to foreign counterparts rose to 71.4 per cent or N15 billion.
In Q3 2022, the premium jumped to N24.7 billion, ceding to foreign firms shot up to 72.5 per cent, amounting to N17.9 billion.
NAICOM lamented oil and gas remains a challenging sector because of its enormous capital and professional requirements.
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Using laws, regulations to drive local content
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Abuja targets 70 per cent local content for underwriting of oil and gas risks, meaning 70 per cent of all insurance risks in the oil and gas business, including prospecting, exploration, drilling, constructions, shipping, distribution, marketing, and transportation, be insured locally with registered Nigerian insurance companies.
Anchor Insurance Deputy Managing Director Adebisi Ikuomola urged Nigeria to use laws and regulations to drive local participation through graduated domestication of these insurances.
“Despite the local content laws and regulations established in Nigeria, insurance companies are yet to fully take advantage of the opportunity to effectively position themselves as major players capable of leading foreign firms in the underwriting of oil and gas business,” he argued.
“The mandates to companies in the upstream petroleum sector to cede their insurance business to local insurers, is in line with efforts to maximise the participation of local insurance companies in the oil and gas sector.”
