Former Director General of Nigeria Insurers Association Mr. Ezekiel Chiejina has asked underwriters in the insurance industry to do a lot of reinsurance in special risk business if they wish to play big in the oil and gas sector.
Also underwriters should ensure that they enter into reinsurance treaty with competent reinsurance outfits.
Chiejina who stated this in Lagos, noted that special risk business is highly capital intensive as such, insurers should ensure that adequate reinsurance is in place because adequate reinsurance is imperative for underwriting companies to pay claims promptly when and where the need arises.
The former NIA DG advised insurance operators to effectively use coinsurance to pull capital and develop relevant skills such that pricing of risks could be done in Nigeria, adding that they should avoid unhealthy competition that erodes the potential profitability of the companies to participate in the sector.
Chiejina stressed that every oil and gas risk underwriting business must be insured to a Nigerian company for them to take what they can cover, then cede the rest to a captive company, adding that insurers are over exposing their account if they take too much of these special risk and exposing clients unnecessarily.
Apart from the recapitalisation exercise which increased the capital base of insurance companies and strengthened them for global competitiveness with improved capacity to underwrite insurance of oil and gas, Chiejina called on underwriters to have reinsurance treaties with ‘A’ rated international companies to further increase their ability to underwrite special risks.
