Nigerian Insurance Comapnies Profit On Domestic Airlines

Lagos — There is allegation that insurance companies in Nigeria are charging domestic airlines premium on aircraft five times higher than the globally offered premium rate despite Nigeria being Federal Aviation Administration (FAA) Category one aviation country with low risk.

This is against the backdrop of allegation that they do not have the capacity to underwrite any risk in the aviation industry on aircraft, a situation that has made them to re-insure with bigger insurance organisations outside Nigeria.

A source close to the airline alleged that insurance companies in the country act as middle men and re-insure with renowned underwriters such as Lloyds of London, Allianz Aviation Insurance and Aerospace Insurance and others who have the capacity to handle such.

This exorbitant premium by insurance companies, experts have said, further compound the problems of domestic airline operators that are already bedeviled by huge debts, high operational cost, sky rocketing aviation fuel and other challenges.

For instance, Daily Independent learnt from a reliable source that an aircraft valued for about $10 million can be insured in the United States, Britain or even the Barbados for between $80,000 and $100,000 as annual premium.

The source further argued that Nigeria with Category one status in civil aviation should be one of the low risk countries and as a result should also enjoy reduced premium from insurance companies in the country ,adding that instead, the premium paid by domestic airline operators in the country to insurance companies are higher and above global standard.

He pointed out that insurance companies in the country are hiding under certain policies to be the domestic airline operators' insurers and are also taking advantage of this to charge between $300,000 and $600,000 for an airplane that is valued for about $10 million only to pay the real underwriters abroad what is globally due, thereby profiteering from the airlines.

He alleged that the insurance regulatory body is not doing anything about it.

Reacting, the Public Relations Officer of National Insurance Commission (NAICOM), Mr Rasak Salami, said there is no iota of truth in the allegation.

The NAICOM image maker stated that both the Nigerian Civil Aviation Authority (NCAA) and NAICOM have investigated the allegation before in the past and that there was no fact to substantiate the allegation.

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By 9jatravel / Administrator, bbp_keymaster

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on Feb 19, 2015

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