Nigerian Airlines Raise the Alarm over Insurance Rip-off by NAICOM

Chinedu Eze

Nigerian airlines have accused the National Insurance Commission (NAICOM) of ripping them off of huge revenues from commissions earned while serving as middle man between them (airlines) and world renowned insurance firm, Lloyds. The airlines said they each pays between $300,000 and $400,000 annually on insurance premium.

The airlines insisted they do not need any middle man, pointing out that what is obtainable in other countries is that airlines negotiate directly with Lloyd and insure their fleet.

According to them, NAICOM has imposed itself on the airlines and ensures that they pay higher premium so that insurance companies under NAICOM would earn high commission.

“Yet the Nigerian insurance companies do not have the capacity to insure these airlines for a third party liability of over $250 million, so after negotiating on behalf of the airlines, NAICOM still take the insurance to Lloyd.”, they stressed.

The airlines further stated that in other African countries, insurance premium goes for two to three per cent of the cost of aircraft but in Nigeria it goes to about six to seven per cent, almost double and sometimes more of what is obtained in other nations in the continent.

A top official of Airborne, Insurance Consultants, David Le Roux who confirmed this, told THISDAY in Johannesburg, South Africa that insurance premium on aircraft in Nigeria would have been as low as could be obtained in other African countries without NAICOM rules, adding that NAICOM is solely responsible for the high premium Nigerian airlines pay on aircraft insurance.

The Executive Chairman of Airline Operators of Nigeria (AON) and the CEO of Jed Air, Captain Nogie Meggison, told THISDAY: “I have said that many times about NAICOM’s interference into aviation insurance strictly for their own personal benefits and I have spoken to Lloyds brokers a couple of times and it has been clear about two issues that are driving insurance to be up to almost four times the normal cost of aircraft insurance in the world. We are talking about increase by seven per cent in Nigeria.”

Meggison said NAICOM works on commission, so the higher the premium the higher the commission for its members.

“If NAICOM targets 10 per cent commission, 10 per cent of $100,000 is $10, 000, so they make more money. But if Lloyd tells the airline to pay $30,000 it does not favour NAICOM because 10 per cent of $30,000 is $3,000. So it does not favour NAICOM to push insurance premium for Nigerian airlines down, so they will like the price to be up so that they will make more money. NAICOM