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Aviation Insurance: Need for a Consortium
Aviation insurance is one of the products of insurance which though lucrative, is yet to attract the expected volume of business in Nigeria. Unlike other areas which have continued to receive tremendous embrace, only a few insurance companies have dared to show very active involvement. One of the reasons often advanced for this is that it is a highly specialized and costly venture.
A comprehensive aircraft policy involves insurance cover of the aircraft itself, the cargo they carry and of particular interest; the operators’ liability for any damage done to the third party property as well as injury or death to passengers.
However, while motor vehicle insurance continues to generate the greatest volume of premium to most insurance companies, aviation insurance is still treated as a sacred area where only the lion- hearted dare to tread.
Airline business has grown in Nigeria to an enviable height. Gone are the days when only the national carrier and one or two others with few aircrafts dominated the scene. Today, we have so many registered airlines with so many aircraft on their fleet. Yet, the industry is not attracting the expected volume of business.
Over time, there has been scramble for business in the oil and gas sector without paying a corresponding attention to the aviation sector. What is responsible for this lack of interest, in spite of the lucrative ness of the sector?
Isaac Omoakia is an insurance consultant with interest in aviation insurance. He said the reason aviation insurance has not been generating the expected interest could be traced to the high risk involved in the business.
He explained that before taking up an aviation insurance cover, the number of aircraft in the fleet of the airline has to be considered alongside the premium that could be generated from such. He said aviation insurance is in place but not with the kind of enthusiasm with which other classes of insurance are being pursued.
One reason there may have been this slow pace, he said, is that “Nigerian airline operators usually go for old aircraft whose airworthiness cannot be guaranteed, and “how would you expect an insurance company to cover such unworthy aircraft especially in a country where until recently operators hardly take out their airplanes for the necessary checks.”
Omoakia added that the number of air crashes that the country has witnessed in the past he said is nightmarish enough to scare away potential insurers.
The result is that because of the high risk involved, any crash would attract huge claims, a situation which would wipe off whatever premiums that such policy may have attracted in the first place.
This, therefore, can be explained from the point of view of some operators who though realize the lucrative ness but are cautious in their moves to cover aviation. According to Mr. Ladipo Ajayi, managing director of Lasaco Assurance Plc, while commenting at a forum, most of the aircraft in Nigeria are old, stressing that in giving insurance cover, the nature of risk has to be considered. Aviation insurance is therefore such area where calculated risk has to be taken.
Omoakia called on insurance companies to form a consortium in the aviation insurance as they did with the oil and gas insurance. He explained that with this, operators would be better empowered to achieve higher retention capacity and bear higher risk.
He said the lack of a consortium in the areas explains why the few insurance companies with aviation cover do so only at the level of smaller aircraft which attract lower risk. These smaller aircraft like helicopters are not prone to the bigger hazards of passenger aircraft where a mishap could eat-up half of the entire capital base of an insurer and the reinsurance company put together.
While agreeing to his suggestion, Ibidapo Balogun, managing director of Equity Assurance is of the opinion that aviation insurance calls for serious attention. He said the level of aviation development today makes its necessary for operators to come together as they did in the oil and gas sector, under the local content policy of the Federal government.
Balogun said aviation insurance covers three main sections; the haul, passenger liability and the third party liability.
Further, he said under the haul cover, the plane must be insured against any damage that borders on technical areas.
Noting the bi-literal agreements in aviation, the passenger liability is bounded by international laws which may arise in the course of its flight. One peculiar area of aviation insurance is that the insured aircraft flies both locally and internationally. The situation therefore calls for minimum internationally accepted protection for passengers in case of crash resulting in injury and death of passengers.
Under the third party liability, the insurance could cover damage done to other people’s goods. An example of this could be found in the EAS passenger plane which crashed into a residential area in Kano some years ago. It goes therefore that because the aircraft over fly the areas populated by people and by extension, property, it becomes highly demanding to cover such areas.
To underscore the value of aviation insurance and why there seems to be a slow development, industry analysts say the minimum standards prescribed by international laws, make it a specialized area which calls for caution.
For instance, going by the international rule, a minimum of $100,000 is placed on the head of each passenger who dies in an air crash.
Omoakia identified this as one area why many insurers may be scared. He cited many air crashes that we have had in Nigeria and the attendant claims many of which the insurers involved are yet to completely settle. Using the minimum entitlement of $100,000 as a guide, Omoakia explained that the Nigeria insurance industry needs to do something to be able to remain competent in the sector.
Between 2002 till early part of this year, the aviation industry has been plagued by many crashes, occasioning death and wanton destruction of properties. For instance in 2002, 148 people perished in the EAS air crash. 96 lives were also wasted in the ADC crash in 2006.In 2005, 106 people died in a Sosoliso air crash while another 117 people were skilled in 2005 in the Bellview air disaster. Many lives have also been wasted in various military air mishaps such as the infamous 1992 disaster involving 158 young military officers. There was another ADC crash that consumed the lives of 142 people within same period. Stakeholders therefore are of the view that for the industry to be vibrant enough to cover higher risk in the aviation insurance, a consortium is needed as was done in the oil and gas sector, under the local content policy of the Federal Government.
The Sterling One Foundation, a non-profit organization dedicated to sustainable development and empowering professionals to drive social impact across Africa, has partnered with Price Waterhouse Coopers Nigeria, UNIDO-Investment Technology Promotion Office, Nigeria, Lagos Business School Sustainability Center, Sterling Bank, NGX Group, the Nigeria Employers Consultative Association and the Lagos Chamber of Commerce & Industry to unveil the first edition of its Environmental, Social, and Governance (ESG) Series.
The partnership aims to support professionals in understanding, implementing, and reporting sustainability progress, in alignment with global standards.
According to a signed statement by the Foundation, the ESG Series was birthed following a workshop held at the 2023 edition of the Africa Social Impact Summit (ASIS) where it was discovered that there was a significant knowledge gap on the subject within the African development ecosystem as well as the private sector.
They commended all the excellent partners who have made the series possible noting that their commitment will strengthen professionals’ competencies in integrating ESG principles into organizational frameworks, and drive positive change while advancing the adoption of ESG principles and increased investment into the economy from local and global investors.
Over the years, Environmental, Social, and Governance (ESG) considerations have evolved from optional to essential for organizations, making the significance of incorporating ESG principles into business plans to enhance sustainability and corporate responsibility, for organizations an increased priority. Statistics indicate that ESG-focused institutional investments are projected to reach $33.9 trillion by 2026.
Through this series, the Foundation said it aims to demystify ESG concepts among the private, public, and development sectors in Nigeria and Africa while highlighting their tangible business benefits, to equip professionals with the knowledge and tools necessary for successful ESG integration in their organizations.
The one-day virtual event gives insight through in-depth sessions featuring thought leaders from private sector impact makers, development partners, international non-governmental organizations, and government agencies.
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Uche Ikejimba Secures Sixth Consecutive AMVCA Nomination With Best Unscripted M-Net Original Nod
Uche Ikejimba, Award-winning producer, has secured her sixth consecutive Africa Magic Viewers Choice Award nod. The organizers made the nomination announcements on Sunday, March 24, 2024, across all Africa Magic channels. It saw Ikejimba clinch a nom in the ‘Best Unscripted M-Net Original’ category for What Will People Say.
In 2022, Ikejimba received two nominations for ‘Best Africa Magic Original Drama Series’ for Unmarried and Dilemma. She secured two other nominations in 2023 in ‘Best Unscripted Original’ for Come Play Naija and ‘Best Original Drama Series’ category for Unmarried.
Speaking about her latest nomination, Ikejimba said, “I’m very humbled and beyond grateful to be receiving my sixth consecutive AMVCA nomination. Anyone who knows me will acknowledge that I often put my blood, sweat and tears into the shows I produce. After Truth won its nomination in 2020, I’ve been holding on patiently for a second win and I hope this is the year. So, here’s my hearty congratulations to my fellow nominees and a huge thank you to the AMVCAs organisers for honoring me.”
Ikejimba is one of Africa’s most-sought after serial producers, and has earned herself the title, ‘Reality TV Series Savant’, with work on 100% Naija, Vodafone Icons, Naija Sings, Calabar Festival Diaries, Big Brother Reunion, Shoot Your Shot, What Will People Say, Come Play Naija, and the more recently airing Husband Material and Overall Best.
She came into the world of Television production as an associate producer on Moments with Mo, the first and only syndicated daily talk show in Africa at the time. However, she has also proven that her talents go beyond producing reality shows or unscripted serials, and she can run with the best in producing original drama series.
In 2016, she landed her first commissioned project with Africa Magic titled Hustle. The series about a young man’s first time in Lagos became an instant hit and ran for three seasons, with 360 episodes. She created, wrote and produced Blink’s original 26-episode drama series titled Truth. The show won an AMVCA for ‘Best TV Series’ in 2020. That same year, she produced and wrote the hit series, Unmarried. The show ran for four seasons and ended on a high.
Off the success of these drama series, she produced Africa Magic’s Dilemma, a 260-episode telenovela. She produced Shallow and the recent Africa Magic fanfavourite original, Manfriend. The show follows the women of the King family and their dysfunctional relationship with the men in their lives. She also produced Showmax’s first original law limited series, AGU in 2023. Her first feature length film, Phantom is a co-production and is also nominated for several awards such as the Toronto International Nollywood Film Festival (TINFF).
Uche Ikejimba has beaten many odds to become a producer and remained steadfast in her commitment to producing the best shows Africa has ever seen. As the continent prepares for the milestone 10th AMVCA, the Reality TV Series Savant and producer extraordinaire is content to celebrate her sixth consecutive nomination. Find out if she clinches her second AMVCA win when the awards air live across all Africa Magic channels on May 11, 2024.
Commercial banks in Nigeria closed 2.021 million bank accounts in the first quarter of 2024, Q1’24, to clean their books of questionable accounts and comply with regulatory orders on the linkage of bank accounts to the National Identity Number (NIN).
This is contained in a report by the Nigerian Interbank Settlement System (NIBSS), which also indicated that the number of inactive bank accounts grew month-on-month, MoM, by four million or 2.0 per cent to 19.7 million in March 2024 from 19.3 million in the previous month, February.
A bank account is classified inactive when it records zero transactions including deposits, withdrawals, transfers or point-of-sale transactions for six months.
However, details of the “Industry Bank Account Database”, a monthly data reported by banks, and compiled by the Nigerian Interbank Settlement System, NIBSS, also indicated that the number of active bank accounts grew by 6.62 million or 3.0 per cent to 219.64 million from 213.02 million in February.
Recall that in December 2023, the CBN issued a directive to all commercial banks in the country to restrict tier-1 accounts without proper Biometric Verification Number (BVN), and National Identity Number, NIN, that are not linked by Thursday, March 1st, 2024.
According to NIBSS data on BVN enrollment count, 61.6 million Nigerians have BVN as of April 2024.
Credit: Vanguard
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