Ogbuotobo Chuks

Due to the absence of inadequate capital and lack of sound ethics and professionalism, operators in the insurance industry loose a whooping N70 billion in premium income as a result of capital flight in the oil and gas sectors of the Nigerian economy. This is as a result of insurance of risks abroad by oil multinational corporations.

This however is expected to change as the federal government’s local content policy in the energy sector will enable risk underwriters in the country to insure oil and gas related businesses in Nigeria from 45% in 2007 to 70% in 2010.

Chief Emmanuel Chukwulozie, commissioner for insurance, said that such a policy will not only reduce the level of capital flight, but will also boost the development of the Nigerian insurance industry. According to him, “the consolidation exercise will greatly boost the local retention capacity particularly in the oil and gas sector, as well as marine and aviation insurance businesses”.

Already, a committee has been constituted which comprises the Nigerian National Petroleum Corporation (NNPC), major oil companies, the insurance industry and National Insurance Commission (Naicom) to ensure implementation of the oil and gas insurance policy.

Nigerian investors are not very insurance friendly, which explains why shares in the insurance sub-sector are on the low side. It is expected that upon the post- consolidation era, customer and investor confidence will increase and as such, the sector will experience a revamp in all areas of operation.

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