Three years after the much- lauded federal government policy, expanding the scope of local content on oil and gas underwriting, there are indications that the policy remains threatened.  These threats range from unethical practices to undulating playing field.  The implication is that if these challenges are not adequately addressed, doors will continually open to capital flight.
Ultimately, this would impact negatively on the country’s balance of trade.
Sources revealed that some insurance companies are still involved in the unethical practices in collusion with foreign underwriters.  The practice is such that the reserved percentage for local underwriting is being traded-off to foreigners.
The federal government in 2006 rolled out the local content policy which exclusively reserved 45percent for local insurers in the oil and gas underwriting.  The euphoria that greeted the policy led to the launch of Nigeria’s first energy insurance consortium.
According to a top industry operator who prefers anonymity, “it is not entirely correct that local insurers collude to transfer their capacity outside the shores of Nigeria”.
However, he admitted that “due to the capital base of our local underwriters which places the highest capitalized insurers in Nigeria among the lowest in the world, it would take a longer time for local underwriters to fully have the capacity to underwrite all oil and gas insurance”.
He added that one of the reasons why the perceived sharp practices may continue is that oil and gas insurance is prized in dollars while local underwriting is done in the local currency.Investigations confirmed that local insurers connive with some officials of the National Petroleum Investment Management services (NAPIMS) to transfer business due to them to foreign insurers.  This is allegedly being encouraged by the huge commission which they earn in foreign currency.
At the launched of Nigeria’s first energy insurance consortium, one of the facilitators, Mr. Jonnie Wilcox raised public expectations when he stated that part of the objectives of the consortium was reduction of outflow, adding  that the consortium would add value to the local capacity and create certainty and access to funds security at the international market.  However, two years after, can these objectives be said to have been achieved?
It is unfortunate that rather than satisfying local consortium bidding, there are still leakages of over 40percent of the reserve to foreign insurers.
Mr. Ambrose Umosor is an insurance consultant.  In accessing the situation, he called on the National Insurance Commission (NAICOM) to discourage leakages while ensuring a deeper surveillance on the local insurers in order to nip these sharp practices in their buds.  He also called for caution in exercising the exceptional waivers right which NAICOM holds.
For instance, section 72 (1-4) of the Insurance Act 2003, stipulates that “the National Insurance Commission (NAICOM) can only grant approval for placement of any risk that cannot be placed locally except in very exceptional circumstances”  Umosor advised NAICOM to ensure that any waiver, necessitated by circumstances, must be opened to public scrutiny.
Expert’s opinion indicates that full implementation of the local content policy holds the key to Nigeria’s insurance growth.  This they hinged on the fact that it would empower the local insurers to dictate prizes at its own capacity.  In addition, it would enable them manage their own risks and reward issues as well as creating empowerment to the industry and all stakeholders.
According to the Managing Director of Trinity Consulting Group, Mr. Adulphus Nwaeze, while reviewing the performance of the policy so far “it is unethical for some operators to be discriminated against, particularly the brokers whose strategic position is crucial to the success of the policy.
He stated that while the policy provided for at least 45percent of underwriting in the oil and gas for local insurers, only less than 10 percent is still being handled by local insurers.
Nwaeze explained that it is unfortunate that some local companies still collude with foreigners to sell out our rightful share under flimsy excuses.
The energy expert called on operators to develop a strategic charter and operational framework, identify leakages for necessary amendments as well as injecting a true Nigerian content opportunities into the policy.
The issue of local content has attracted various comments over time.  According to the chairman, Nigerian Insurers Association (NIA) Mr. Wole Oshin, confronting local content policy goes beyond local capacity.  He said the inability of local underwriters to effectively markets themselves abroad is another challenge.
Earlier, the Managing Director of First Bank of Nigerian Insurance Brokers (FBNIB), Mr. Val Ujumah hinted that government’s desire of the local content policy may not be realized unless brokers are carried along.
He stated that brokers have been sidelined in the selection of firms for the oil and gas insurance while also faulting the bidding processes for participation.
Of significance, he said, is the fact that contrary to current practice, bidding for insurance should naturally be for brokers and not insurers. 
Mr. Ujumah explained that what is in practice now is that the bidding process is being controlled by one body which he identified as the National Petroleum Investment Management Services (NAPIMS).
He pointed out that on the contrary, it is the brokers who should be allowed to choose the insurers to work with and not for the insurers to choose the reinsure or broker as presently happening.
Experts’ opinion is that with an enlarged position reserved for local underwriters, our economic life would be boosted.  The policy is also expected to boost the insurance industry which has been in limbo over a long time until recently.
It would also contribute substantially to the nation’s gross domestic product (GDP) which is projected to have grown by more than 10 percent.
Interestingly, however, operators have risen to these challenges as they collaborate with industry regulator to straighten crooked lines.
According to Mr. Wole Oshin, Nigerian Insurers Association “has further been able to secure the Guidelines on Consortium Bidding with the assistance of the National Insurance Commission”.
In his statement at this year’s Annual General Meeting (AGM) he explained that the industry has also “presented a joint memorandum to the National Assembly during the public hearing on Nigerian Oil and Gas Industry Content Development Bill”
Can one then say that these challenges appear to be receiving attention?
If the various efforts being made by stakeholders are anything to go by, there could be light at the end of the tunnel.
For instance NIA, according to Oshin, has also had “several meetings with the Nigerian Council of Registered Insurance Brokers (NCRIB) for the purpose of bridging the communication gap and fostering mutual co-operation and understanding”.
Therefore, if the various provisions of the Insurance Act especially as it relates to key issues as Nigerian content on oil and gas are adhered to, the future of the industry would brighten further which would place the industry in its right position among top insurance companies in the world.