Daily Independent Online.
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Friday, July 02, 2004.
Oil insurance needs consortium funding, says Adebisi
By Charles Okonji
Snr Business Correspondent, Lagos
Despite the continuous exercise of recapitalisation,
no insurance company can single-handedly undertake the underwriting of oil and
gas insurance.
Reason: The capital base of insurance firms is
inadequate to underwrite the volume of business that an oil firm undertakes.
Executive Chairman, Prime Loss Adjuster Limited,
Chief Amusa Titilayo Adeniyi, said only a consortium of insurance companies
could venture into such an investment in the industry.
Adeniyi, who was the managing director of Sun
Insurance Company Plc before he retired recently, said that insurance of oil
industry’s facilities like platforms, helicopters, rigs and others would
require huge capital base because of the associated risk involved in such
facilities, stressing that even NICON, as big as it is, would not be able to
underwrite oil facilities 100 per cent.
He said: “Oil insurance is international in nature. No single
insurance company can insure oil industry in Nigeria. A company can only take a
fraction. In London insurance market, the business is distributed. I was
engaged in that kind of business when I was working as an adviser of insurance
to one petroleum company. But there are a lot of risk associated with oil,
platforms, helicopters, rigs and others.
“ So, the risk is very complex that no
insurance company can undertake it on its own. That is why there is now a
consortium of insurance companies in Nigeria, which wants to start insuring oil
companies’ facilities. However, the insurance of oil facilities depends
on the value of the rig and the age of the rig,” he added.
Adeniyi pointed out that though the experience of the
owners of the rigs would still counted, the offshore rigs had become
“more complicated, particularly now that they are computerised,”
which could only be insured by a consortium of companies that had
representatives in the insurance market in the United Kingdom and other
overseas insurance markets.
He said that the problem with the insurance business
in Nigeria was lack of knowledge, explaining that in the United Kingdom, the
awareness of insurance was over 90 per cent, while in South Africa, the
awareness had reached up to 70 per cent.
In Nigeria, he said that insurance penetration was not up to
10 per cent, as “we are not insurance conscious because of our own type
of life, that is, extended family system, which is a form of insurance in
itself” and the inability of those people, who insured their property, to
employ professional like assessors to prepare their claims.
