Saturday 27 June 2015

Why Nigerian Airlines Pay High Premium on Aircraft Insurance

ThisDay

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Managing Director of Arik Air, Chris Ndulue
Chinedu Eze
The Managing Director of Arik Air, Chris Ndulue has said that insurance companies’ assessment of Nigeria as high risk country might be responsible for the relatively high insurance premium Nigerian airlines pay for their aircraft.

Ndulue disclosed this to THISDAY on Tuesday when a team of underwriters visited the airline from London to inspect facilities at its operational headquarters.

He said that Nigeria is wrongly perceived as high risk country because of the activities of insurgents who operate at only one section of the country, adding that this might have influenced the high aircraft insurance cost in the country.

“The premium on aircraft insurance paid by airlines is something that is decided on case by case basis and it reflects the insurance company’s assessment of the risk. So if they think your risk is high, your premium is bound to be high and if they think my risk is lower, my premium will be lower.

“The only thing that will make a difference between insurance premium in Nigeria and in South Africa is country risk. Nigeria’s may be high because it will reflect the insurer’s perception of the country risk. If Nigeria’s insurance premium is higher than that of South Africa then insurance companies have assumed that Nigeria’s country risk is higher than that of South Africa.

“International perception of Nigeria is unfavourable but Nigeria is not as bad as it is perceived to be. If you don’t check that very well you pay a country risk that is far higher than what you should pay, especially with the issues of Boko Haram,” Ndulue said.

He remarked that it was to counter such negative perception that prompted the airline to invite its underwriters to Nigeria to see things by themselves.
“That is why today our underwriters from London insurance market visited to see that we are running a world class airline here. We are much bigger and ahead of many airlines in Europe. They can only see that when they come here. It will be difficult to convince them otherwise.

“We have our operations control centre (OCC) which is ahead of what the majority of airlines in Europe has. So they come here and they see it for the first time, even though they have been to airlines’ headquarters in Europe, they have not seen this in many of them before,” the Arik Managing Director said.

Ndulue believed that after the personal experience of coming to Nigeria and looking at things and the security level in Lagos and other parts of the country the team would have a better understanding of Nigeria in terms of security profiling and risk assessment.

“We showed them our maintenance facility, we showed them where the Lufthansa Technic personnel are and we showed them our ground staff training school. We showed them what we are doing here and how we even manage our aviation security and they realised we are nothing less than the best airline they found in Europe.
And we let them know that this is Lagos and that it is safe. There is nothing happening here; there is no war here but there is insurgency in Borno state and sections of north east, but that does not mean that the whole country is insecure ,” Ndulue said.

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