25 July 2012, Sweetcrude, LAGOS – MR Ibrahim Hassan, Deputy Commissioner, Technical, National Insurance Commission, NAICOM, says the Nigerian Oil and Gas Content Development Act 2010 has given a boost to the local insurance sector.
Hassan said the sector has been given a new lease of life by Section 50 of the Act, which provides that no insurance risk in the industry shall be placed off-shore without the approval of the NAICOM to ensure that local capacity has been exhausted.
“The Act has also greatly empowered insurance brokers. By section 49, all operators, project promoters, alliance partners and Nigerian indigenous companies engaged in any form of business, operations, or contract in the Nigerian oil and gas industry, are required to insure risks related to its oil and gas business, operations or contracts with an insurance company(s) through an insurance broker registered in Nigeria under the provisions of the Insurance Act 2003,” he said.
Pointing to a problem in the law, he said: “The Act failed, however, to define local capacity, and this is a fundamental omission.
“Is local capacity equal to the net retention of insurance companies in Nigeria put together? Is it net retention plus reinsurance treaty available to the local underwriters. Or is it net retention plus reinsurance treaty plus local reinsurance?”
According to him, in the absence of a statutory definition, what constitutes local capacity is open to conjecture.
But, he said this challenge could be overcome by way of NAICOM making a regulation on the matter.