Mutual Benefits, Custodian, over 100 brokers win NNPC’s N12.9bn insurance account

Chuks Udo Okonta

This year’s insurance business of the Nigerian National Petroleum Corporation (NNPC) put at N12.9billion ($79.4million) has been secured by Mutual Benefits Assurance Plc; Custodian and Allied Insurance Plc and over 100 insurance broking firms, Inspen can report.

Our investigations revealed that Mutual Benefits Assurance is leading the non oil business, while Custodian and Allied leads in the oil business. It was also gathered that Hogg Robinson Nigeria Limited leads other brokers in the oil business and Worldmark Group leads in the non oil.

The premium which has been paid to the underwriters moved from $71 million paid last year to the present $79.4million, a development which operators said is good development for the industry.

Though the brokers are yet to get their commissions, some of them interviewed expressed delight over the increase in the number of brokers in this year’s business, as only 42 brokers were selected last year for the business.

 

Managing Director Plum Insurance Brokers Limited, Mrs Laide Osijo, lauded the efforts of NNPC management in increasing the numbers of brokers in the business. She noted that during her tenure as the President Nigerian Council of Registered Insurance Brokers (NCRIB), she advocated for the increase of brokers, canvassing that their participation would enable them understand the business.

She also applauded the corporation for complying with Section 50 (1) of the Insurance Act 2003 that stipulates payment of premium before attachment of cover, otherwise known as “No Premium, No Cover.”    

 

The oil and gas business earns the insurance sector huge premium and is profitable when there are no claims. On the other hand, a major loss could force the underwriters to pay huge claims.

As part of local content initiative of the Federal Government, the National Insurance Commission officially introduced the guideline for the operation of oil and gas insurance business in the country in 2010.

The guideline, which was issued pursuant to the provisions of the Insurance Act, 2003 and the National Insurance Commission Act, 1997, aims to increase the take of local underwriters in the business and curb capital flight from the country.

The guideline states, “No person or organisation shall transact an insurance or reinsurance business with a foreign insurer or reinsurer in respect of any life, asset, interest or other properties in Nigeria, classified as domestic insurance, unless with a company registered under the Insurance Act, 2003.”

The Commissioner for Insurance, Fola Daniel, who is happy over the latest development, said the sector had been building both financial and human capacities for the oil and gas business.

“I can say to you that three years ago, the entire retention capacity in Nigeria was less than six per cent; now, we are entering into over 30 per cent, we are making very good progress,” he said.

He noted that the local underwriters had to take what they could insure before they reinsured the rest abroad.

“If we take more than we can cough out, it will sink the market; so, we really need to be sensible in the assumption of 70 per cent as prescribed by the Nigerian Content Act. But we are making big strides; we are moving forward,” Daniel said.