November 30, (THEWILL) — To ensure compliance, resilience, and alignment with global best practices, the Director General of the Nigeria Civil Aviation Authority (NCAA), Captain Chris Najomo, has urged insurers who cover risks in the aviation industry
Captain Najomo made the call during the Civil Aviation Insurance Compliance and Financing Summit organised by the Authority recently in Lagos.
Captain Najomo, who identified the objectives of the summit themed: Securing the Skies: Navigating Aviation Insurance and Aircraft Finance Safeguards, said the challenges include the definition of practical modalities for retaining key components of existing insurance contracts while transitioning to new frameworks.
Other challenges include 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; harmonising aviation safety oversight with financial indemnity obligations; and establishing the guidance for operationalising reinsurance frameworks involving foreign insurers under the new addendum.
In his keynote address, the Minister of Aviation and Aerospace development, Festus Keyamo, 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.
The Minister 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 the airlines, which must abide by the 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, the Director Inspectorate, National Insurance Commission (NAICOM), Bankole Ajibola, identified key issues on aircraft insurance, lessors and airlines.
NAICOM also identified key issues about aircraft insurance. These include maximum retention per aviation risk capped at 5% of shareholders’ funds; senior-level authorisation for all aviation placements; compliance with international standards, including financial strength ratings; local content requirement; and a 72-hour occurrence-based reporting requirement.
The Chief Operating Officer of United Nigeria Airlines, Mazi Osita Okonkwo, expressed regret that there is no capacity in the Nigerian insurance market to structure, arrange, place and underwrite a high level 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 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; what is very important is maintenance, and 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.
The participants also agree that the NCAA should prequalify insurance companies that will be allowed to serve the aviation industry in terms of capacity.
Anthony Awunor, is a business correspondent who holds a Bachelor of Arts Degree in Linguistics (UNILAG). He is also an alumnus of the Nigerian College of Aviation Technology (NCAT), Zaria Kaduna State. He lives in Lagos.
