Nigerian insurance companies ceded over $46.2 billion to international insurance companies out of a total sum insured of $146.2 billion risks of top 11 companies in 2018.
Sum insured is the amount of money that an insurance company is obligated to pay in the event of crystallization of the insured risk
This also means that the local companies were able to retain a total of $100 billion worth of risk in the year.
The National Insurance Commission, NAICOM, at a seminar for insurance journalists in Ijebu-Ode, Ogun State, over the weekend, listed the top companies involved as the Nigerian National Petroleum Corporation, Chevron Nigeria Limited, Mobil Producing Nigeria Limited, Lafarge HOICIM, as well as Dangote Fertilezer Limited.
Others are Sahara Power (Egbin Power Plc), Yinson Plc, Stardeep Water Petroleum Limited, Dangote Refinery, 11 Plc (formerly Mobil Oil), as well as Centre for Energy Research and Training, affiliated to Ahmadu Bello University.
NNPC’s consolidated insurance package amounting to a sum insured of $99.6 billion had 78 percent or $77.7 billion retained locally while 22 percent or $21.9 billion was ceded abroad
Placed second is Chevron Nigeria Limited which had a total sum insured of $14.3 billion with local insurers getting $10.7 billion and foreign insurance firms got $3.6 billion.
Mobil Production Nigeria Limited had sum insured of $14.1 billion; local got $9.9 billion while foreign got $4.2 billion.
Lafarge HOICIM combined property damage/business interruption and public liability had sum insured of $564.9 billion, local intake was $388.2 billion while foreign was $176.6 billion.
Dangote Fertilizer, the first local conglomerate in the top 10 list, all risks and third party liability, had sum insured at $1.1 billion with local at $0.7 billion and foreign, $0.4 billion.
Other companies in the top 10 includes Sahara Power (Egbin Power Plc), Yinson Production energy package, StarDeep Water Petroleum Limited energy package, Dangote Refinery and 11 Plc aviation refueling liability insurance
While stating that the industry needs to retain more risks locally, NAICOM said that the recapitalization exercise could not have come at a better time for that purpose.
Speaking on the importance of the industry’s recapitalization policy, Deputy Commissioner for Insurance, Technical, Sunday Thomas, noted that the move was to cause a shift in the system.
He said, “We want to prosecute this recapitalization like one never before it. The whole idea of the exercise is to have an industry that is strong, that is diligent in prosecution of its assignments, that is highly liquid in terms of claims settlement, that is solid in terms of assets, that is visible in terms of retaining business within our environment.”
Director, Policy and Regulation Directorate, NAICOM, Pius Agboola, added that one of the reasons while companies prefer raising capital through debt instruments is because of the high cost of raising funds through the capital market, but good enough, the Commission is already working on palliative measures on the new capital directive.