The recent decision by the Federal Executive Council (FEC), to provide broad insurance cover for all assets in Federal Airports across the country comes in response to deep concerns from industry experts that safety, reliability, and quality must always remain a top priority of government for Nigeria’s aerospace.
Globally, the crucial essence of insurance for the aviation sector targets to achieve financial protection – helping to mitigate losses from incidents of accidents, damage, or liability claims, and ensuring business continuity, and stability.
Other essentials of insurance for the aviation sector, include compliance with legal requirements, which many aviation authorities mandatorily require. It is also undoubtedly true that comprehensive insurance coverage enhances the reputation and credibility of airlines, thereby reassuring passengers and stakeholders.
Lloyds London, a renowned insurance and reinsurance marketplace, was the first to make it possible to offer insurance in aviation before the World War in 1914. Since then, aviation insurance has become one of the largest sub-sectors in the global insurance market.
This critical responsibility in the country is handled by the Nigerian Civil Aviation Authority (NCAA). The NCAA continues to ensure that all persons engaged in aviation operations constantly comply with minimum requirements for air carriers in compliance with their potential compensation obligations.
Available records however, indicate that insurance contracts for assets across the nation’s federal airports were last approved in December 2020. The approval of a ₦1.09 billion insurance package to cover critical assets and personnel across all federal airports is, therefore, coming four years after.
Briefing journalists at the Presidential Villa, Abuja after the meeting of cabinet presided by President Bola Tinubu, the Minister of Aviation and Aerospace Mr. Festus Keyamo confirmed that most of the assets captured in the contract have remained uninsured for a long time.
Minister Keyamo said “This approval ensures both infrastructure and personnel of the FAAN are covered, in line with global best labor practices.
“It is one of the requirements of international civil aviation (ICAO), that our airports are insured for us to get their certification. So, these are the two major reasons why we brought these memos, to insure our critical assets and personnel in all our airports in the country, all federal airports, with no exception.”
According to Minister Keyamo, “We went through a rigorous process and shortlisted five of the major insurance companies in Nigeria. One is the lead insurance, and then the other ones are the co-insurance.”
The Secretary to the Government of the Federation (SGF), George Akume had earlier sent a circular to all Ministries, Departments, and Agencies (MDAs), mandating them to insure critical assets of government.
The presentation of the memo requesting for cabinet’s approval was therefore, in compliance with that directive of the SGF, Keyamo told reporters at the Villa.
“So, for the sake of clarity, we presented Leadway Assurance Company Limited as the lead underwriters, Cornerstone Insurance PLC as a co-underwriter, Linkage Assurance PLC as a co-underwriter, NN Insurance Company as co-underwriter, and Anchor Insurance PLC as also co-underwriter.
‘This memo was prompted by Mr. President because we cannot continue to run our airports and critical assets, as precious and expensive as they are, without insurance cover
“Most of these assets have remained uninsured for a long time. This approval ensures both infrastructure and personnel of the Federal Airports Authority of Nigeria (FAAN) are covered, in line with global best labor practices.
“Of course, you know that is in keeping with best labor practices that you don’t have a personnel working in such an environment without insurance cover, so that has been done today for all the airports in Nigeria,” Minister Keyamo explained.
With the coming into force of Nig. CARs 2022 on 10th July 2023, which makes it mandatory that all airlines comply with Part 18.14.1.1 of the Regulations, Minister Keyamo needs to proceed further with his actions, by encouraging private sector players in the industry to follow suit.
NewsQuest recalls that the NCAA in August 2023 had demanded compliance with Nigerian Civil Aviation Regulations (Nig. CARs) 2022 on insurance cover to be maintained by all allied aviation services providers. The directive was contained in an All 0perator Letter referenced NCAA/DG/AIR/11/16/369 and dated 11th August 2023, it was signed by the former Director General of the Civil Aviation (DGCA), Captain Musa Nuhu, and addressed to all airlines and allied aviation service providers.
Many airlines in Nigeria have often raised concerns of some difficulties they face such as high premium costs, and the challenge of having to share risks with international insurers due to the high financial demands of aviation insurance. Premiums paid by airlines in the country are said to be among the highest globally, with Nigerian airlines paying between 8 percent to 12 percent of an aircraft’s value annually, compared to 0.5 percent to 1 percent in Europe and the United States.
At this moment, Minister Keyamo should take additional steps to encourage operators to see the urgency and necessity of aviation assets insurance, while the Federal Government also sustains its efforts to improve the aviation business environment. In the end, it is Nigeria and Nigerians that would benefit the most.
