Najomo admonishes aviation insurers on best practices
The Director General of the Nigeria Civil Aviation Authority (NCAA), Captain Chris Najomo, has advised insurers who cover risks in the aviation industry to ensure compliance, resilience, and alignment with global best practices.
Captain Najomo made the call during the Civil Aviation Insurance Compliance and Financing Summit organized by the Authority recently in Lagos.
Captain Najomo who identified the objectives of the summit themed: Securing the Skies: Navigating Aviation Insurance and Aircraft Finance Safeguards, said the challenges include the definition of practical modalities for retaining key components of existing insurance contracts while transitioning to new frameworks.
Other challenges include the clarity of global expectations and international best practices in policy adoption and regulatory compliance; outlining technical requirements for compliance without breaching lease or loan covenants; harmonizing aviation safety oversight with financial indemnity obligations and establishing the guidance for operationalizing reinsurance frameworks involving foreign insurers under the new addendum.
In his keynote address, the Minister of Aviation and Aerospace development, Festus Keyamo, stated that airlines must ensure full compliance and transparency in their insurance programmes; insurers must provide capacity, competitive products, and global-standard risk management, and lessors and financiers must remain confident that Nigeria provides a stable investment environment.
The Minister also insisted that regulators must maintain alignment, operational coordination, and proactive communication.
Insurers and airline operators brainstormed at the summit on how to resolve the prevailing dilemma faced by the airlines who must abide by the local content policy by insuring with local insurers and also follow the directive of lessor who demand their aircraft on lease must be insured by international insurers like Lloyd’s of London.
In his presentation on Addendum to Prudential Guidelines for Insurers and Reinsurers, the Director Inspectorate, National Insurance Commission (NAICOM), Bankole Ajibola, identified key issues on aircraft insurance, lessors and airlines.
NAICOM also identified key issues about aircraft insurance. These include maximum retention per aviation risk capped at 5% of shareholders’ funds; senior level authorization for all aviation placements; compliance with international standards, including financial strength ratings; local content requirement and 72-hour occurrence-based reporting requirement.
The Chief Operating Officer of United Nigeria Airlines, Mazi Osita Okonkwo, expressed regret that there is no capacity in Nigeria insurance market to structure, arrange, place and underwrite high level of risk for operators, in terms of insuring large body aircraft.
According to him, this stunts the development of the insurance market in Nigeria.
He noted that Prudential Guidelines are the first step in the insurance cover process and advocated for the liberalisation of the market to make it competitive which will be good for all stakeholders and in line with the renewed agenda of the federal government that stresses on reform and liberalisation of the market for improved posterity.
Okonkwo observed that reforms in the banking sector have led to the emergence of these banks into globalized institutions, noting that this is needed in the insurance industry.
“There should be liberalisation of the insurance market for the growth of the industry,” he said.
Participants at the summit agreed that in terms of safety there is really nothing like old and new aircraft; that what is very important is maintenance and called on the regulators and the Ministry of Aviation.
