Update1: Leadway, Ensure lead in N18.3b NNPC insurance for 2017

…oil and non-oil assets N16.6 billion.

…group life insurance N2.3 billion.

The nation’s insurance industry has received a whopping N18.3 billion from the Nigerian National Petroleum Corporation (NNPC) for the coverage of its oil and non oil assets, as well as group life policy of its employees for 2017.

The premium, which has been released, according to industry sources, became effective April 1, 2017.

BusinessDay findings are that Leadway Assurance Company Limited is leading 33 other co-insurers in the oil and non-oil assets account valued at $40,710,944 million, equal to N16.6 billion with the sum assured totaling $27 billion.
While Ensure Insurance is leading other co-insurers in the group life business valued at N2.3 billion. Group life insurance is a provision in the Pension Reform law, which mandates employers to provide insurance cover for their employees against death in service or permanent disability.
A top executive of one of the leading insurers, responding to BusinessDay enquiries on details of the contract said: “unfortunately, we are unable to release client confidential information. Only they can confirm to you and you may wish to approach NNPC Insurance Division directly.”

In 2015 NNPC paid the sum of N2.36 billion for its employee’s group life insurance, while it also paid out N14.6 billion for its consolidated assets (oil and non oil assets).
The insurance policy which commences 1 April 2015 has NSIA Nigeria Limited, formerly ADIC Insurance Limited, as the lead underwriter.

Section 4 (5) of the Pension Reform Act 2014 stipulates that every employer, to which the Act applies, shall maintain a group Life Insurance Policy in favour of the employees for a minimum of three times the annual total emolument of the employee.
According to the guidelines for group life insurance policy for employees jointly issued by the National Insurance Commission (NAICOM) and National Pension Commission (PenCom), the employer is required to fully bear all costs in relation to procurement of this policy, and this shall be in addition to the contributions to be made by the employer to each employee’s Retirement Savings Account.
In line with the local content law, local insurance companies will retain 70 percent of the total risk, while the remaining 30 percent will be ceded abroad to foreign reinsurers. As part of the local content initiative of the Federal Government, NAICOM had in 2010 introduced the guidelines for the operation of oil and gas insurance business in the country.
The guidelines, which were issued pursuant to the provisions of the Insurance Act, 2003 and the NAICOM Act, 1997, aim to increase the stake of local underwriters in the business and curb capital flight out of the country.
One of the provisions of the guidelines states that, “No person or organisation shall transact an insurance or reinsurance business with a foreign insurer or reinsurer in respect of any life, asset, interest or other properties in Nigeria, classified as domestic insurance, unless with a company registered under the Insurance Act, 2003.”
It added that no insurance risk in the Nigerian oil and gas industry would be placed overseas without the written approval of the commission, which shall ensure that the local capacity had been fully exhausted.

 

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