Lloyd’s of London, the world’s leading insurance market, has issued a warning to Nigerian airline operators that it might be forced to blacklist the country in the face of continued failure of some operators to fulfil their obligations of paying their premiums to the insurer regularly.
Representatives of Lloyd’s of London market who were in Nigeria recently noted that the Nigerian market was a high-risk market, yet the volume of business from the country was quite modestly small and airline brokers were not paying their premium.
To this end, they cautioned that in view of the fact that airline brokers in Nigeria had in recent times failed to pay their premiums the Lloyd’s market might have no other choice than to blacklist the country, which might have far-reaching consequences for the aviation industry and the country to a large extent.
Nogie Meggison, chairman, Airline Operators of Nigeria, says the airlines say they have naira, but that they cannot pay the premiums due to forex constraints, saying further that Lloyd’s market accounts for about 92 percent of reinsurance of airlines globally, 5 percent by Russian market, Cyprus and others, while a mere 2 percent is retained locally worldwide.
“The Nigerian market is unable to effectively underwrite risks in aviation because of the high exposure of an average $500 million for just one airplane to cover hull, war and third party liability.
“When this figure is multiplied by the number of aircraft operating in the country it becomes clear that Nigerian insurance companies can’t cope, considering the enormous volume of resources needed to cover all those aircraft of which the total coverage value will be in excess of $6 billion.
“Virtually 100 percent of the aircraft being operated in Nigeria are re-insured in the Lloyd’s market. Hence, Nigeria can’t afford to be blacklisted as a nation because this will have very grave and deleterious consequences, as the entire domestic airlines will shut down since airplanes can’t be operated without being insured.”
It will take some days at best to switch to the secondary market of Russia and China, whose premiums will also have skyrocketed if we are blacklisted by Lloyd’s, Meggison says.
