Nigerian underwriters' plan to retain more of oil and gas risks locally with the creation of the Energy and Allied Insurance Pool of Nigeria (EAIPN) is yet to be fully realised six years after the pool was established.
The formation of the 14-member insurance pool was to enable local insurers to cover over 75% of the big ticket risks usually ceded offshore, reported New Telegraph.
Nevertheless, data from the industry regulator show that local insurers currently cede about 65% of their oil and gas risks locally. This translates to around $92bn retained locally out of total premiums from the oil and gas sector of over $140bn.
The National Insurance Commission (NAICOM) had, six years ago, inaugurated 14 insurance companies to operate the technical management board of EAIPN with the hope that it would help the industry retain capacity in oil and gas risks underwriting, curb capital flight and grow the local market in energy and allied risks underwriting. The 14 pool members had contributed 40% of their subscribed lines.
Under the law, no insurance risk in the Nigerian oil and gas industry shall be placed overseas without the written approval of NAICOM which shall ensure that Nigerian local capacity has been fully exhausted before the risk can be placed offshore.