Adressing Marine, Aviation Insurance Underwriting Deficiencies
Problems associated with Marine and Aviation insurance underwriting in Nigeria recently attracted the attention of the Chartered Insurance Institute of London, which collaborated with risk analyst consultants to stage a two-day summit to address the problems. Ebere Nwoji captures the details of the summit
The important nature of marine and aviation insurance as well as their peculiar nature in guaranteeing safety of both marine and aviation cargoes and their passengers has created the need for insurance practitioners to be well grounded in underwriting of marine and aviation insurance risks.
Marine insurance covers the loss or damage of ships, cargo, terminals, and any transport by which the property is transferred, acquired, or held between the points of origin and the final destination.
Aviation insurance on the other hand provides cover for insureds such as airlines, aircraft manufacturers, airports, service providers like refuellers, caterers, security screeners and the like against loss, damage and liability, in return for premiums.
The Nigerian maritime insurance market, like the global market is inundated with a lot of challenges. Prominent among these challenges is activities of fake operators hawking fake certificates, causing the industry to lose huge premiums, as well as tarnishing the image of the industry. Ths is because when importers and other stakeholders in the marine business incurred losses while holding the fake certificates, the fake insurers will be no where to be found to pay their claims. This then falls back on the image of the insurance industry as a whole.
Similarly, the global marine insurance market is facing huge losses as a result of catastrophe events and terrorist attacks.
One of the major challenges of the aviation insurance, according to insurance experts like the former Chairman Nigeria Insurers Association (NIA), Eddie Efekoha, is high risk exposure of airline operators in Nigeria which made aviation insurance premium in Nigeria to be higher than those of other countries.
Similar to this problem is the double premium burden on airline operators due to local content law. These have created the need for thoroughbred professionals to handle both the underwriting of aviation and marine insurance in Nigeria.
The need to fill this gap prompted the Chartered Insurance Institute of London in Collaboration with Risk Analyst Consultants (UK) Limited, to organise flagship seminar on Marine and aviation risk insurance in Nigeria.
The seminar took place at the insurance house Saka Tinumb Lagos. According to the organisers, marine and aviation risk insurance is a specialised sector within the insurance industry, dedicated to managing the unique risks of maritime and aviation activities. These vital industries, each with its distinct and complex challenges, rely on insurance to ensure the continuity of their operations.
KNOWLEDGE GAP AMONG PROFESSIONALS
Managing Consultant Risk Analyst Consultants (UK) Limited, Dr. (Mrs) Funmi Babington-Ashaye, said the Summit, which was first of its kind in Nigeria, was imperative due to the knowledge gap among professionals in insurance industry especially in the aviation insurance space, where rates are still being determined by the foreign reinsurers.
She submitted that the determination of aviation rate by foreign reinsurers, had resulted in high premiums for aviation clients.
“This summit presents a pivotal opportunity to bridge this knowledge gap and foster the development of domestic expertise, enabling Nigerian professionals to accurately assess risks, understand the basis of premium computation and have the ability to provide customised insurance solutions for local businesses operating in these two sectors,” she posited.
In his keynote address, President Chartered Insurance Institute of Nigeria (CIIN) Edwin Igbiti, said to enhance the resilience of marine and aviation insurance in Nigeria, practitioners must delve into the intricacies of risk assessment, embrace innovative technological solutions, engage in robust dialogue with regulatory bodies and strengthen their commitments to training and development within their industry.
He noted that the seas and skies form the arteries of the global economy, stressing that it was upon these vast expanses that the lifeblood of international trade flows freely, connecting continents and providing the channels through which economic prosperity is pursued, achieved, and sustained.
He remarked that with great opportunity comes significant risk, a variety that those involved in marine and aviation insurance knew all too well.
“Here in Nigeria, we stand in a unique position. Our country, graced with expansive coastlines and a strategic position in African aviation, is poised at the heart of an evolving narrative – one that speaks of growth alongside challenges, I believe you will attest to this during your tour to some of our airlines and seaport. The question then is not whether we will face these challenges, but how we will respond to them when they arise,” he questioned.
COMPLEXITIES
He maintained that the marine and aviation sectors were fraught with complexities – from the volatile nature of the sea and air to the intricate legal and regulatory frameworks that govern these industries, adding that professionals in this field needed a deep understanding of these industries.
“These insurance policies are not only essential for financial protection but also contribute significantly to the safety and sustainability of these global sectors,” he added.
He maintained that in the marine insurance realm, operators have witnessed the ripple effects of global events on their local markets, stressing that the shifting tides of international trade agreements, piracy concerns off coasts and the ever-present threat of environmental calamities were but a few of the realities insured against daily.
“On the aviation front, our skies are busier than ever. As the demand for air transport rises hand in hand with technological advancements, the onus lies on us to develop insurance products that not only meet the needs of today but also anticipate the demands of tomorrow, “he added.
RESPONSIBILITY OF INSURERS
He noted that the responsibility of insurers is philosophical, as they serve as the safeguard against the unpredictable, the shield in times of turmoil and the providers of peace of mind in an inherently uncertain world.
“Each vessel that embarks upon the waters, each aircraft that takes to the skies, carries with it the aspirations of Nigeria. They carry our people, our goods, our hopes – and with each journey, they carry the trust that we, as insurers, have done our utmost to protect those aspirations from harm.
“At this summit, it is incumbent upon us to fortify this trust – to discuss, debate, and determine how we can enhance the resilience of marine and aviation insurance in Nigeria. We must delve into the intricacies of risk assessment, embrace innovative technological solutions, engage in robust dialogue with regulatory bodies, and strengthen our commitment to training and development within our industry,” he submitted.