The National Insurance Commission (NAICOM) and the Nigerian Content Development & Monitoring Board (NCDMB) are set to collaborate to enhance the participation of insurance firms in local content businesses in the oil and sector of the Nigerian economy.
Mr. Olorundare Thomas, the Commissioner for Insurance/CEO of NAICOM, said at the 2023 Oriental News Summit in Lagos that the drive towards enhancing local content speaks to the long-term plan of the government, borne out of good intention and strategy to grow the nation’s economy, develop Nigerian industries and her human capital.
Thomas said: “It is worthy to note that prior to the Nigeria Oil and Gas Industry Content Development Act of 2010 (NOGICD ACT), the Insurance Act 2003 made far reaching provisions for the domestication and domiciliation of insurance services in Nigeria. In particular, Section 65(7) made it compulsory for any property located in Nigeria, whether moveable or immovable to be insured with a Nigerian registered insurer. Section 67 requires that insurance of all imports into Nigeria must be insured by insurers registered in Nigeria.”
The NAICOM CEO said the historical relationship between both industries could be traced to the birth of the latter, following the issuance of the NOGICD ACT, the insurance industry in collaboration with the Board brainstormed leading to issuance of The Guidelines for Oil & Gas Insurance Business issued in 2010, which amongst others, stipulates the roles and responsibilities of insurance institutions in ensuring compliance with local content law, with the primary consideration of ensuring actual exhaustion of available In-Country Insurance Capacity. He added that the overall aim is the development of indigenous content through increased indigenous participation.
“The synergy between both industries was renewed when both agencies identified the need for a veritable platform for inter-agency collaboration in order to give effect to the requirements of Sections 49 and 50 of the NOGICD Act 2010 by providing guidance to Operators in the Oil and Gas necessary for satisfying the provisions of the law in relation to insurance transactions. The Jointly issued Guidelines portend to satisfy the intent and provision of the laws: thereby enabling the NCDMB monitor utilisation of in-country insurance capacity which is a road to increased retention, growth in in-country technical capacity, Job creation, increased penetration and GDP growth, human capacity development, and many others.”
He listed the Benefits of the Guidelines to the insurance and oil/gas sectors, and the nation in general to include:
- The intention is more tilted towards encouraging preventive, detective; as well as corrective and compensatory regulatory controls.
- It is beneficial, to also state, that necessity is on us to ensure that risks are accurately priced and professional advice is given to insuring entities, especially in the Oil and Gas space, as it poses vantage position to avoiding overpricing of products, underrating of risks, negligent omission of necessary covers and its consequential effect on avoidable pressure and burden on finances.
- The Company’s exposures where not accurately reviewed could deter incentivisation from the regulator that could be provided in future to compensate for risk improvements deployed to reduce potential environmental liabilities, or the advantages enjoyable by deploying capital on transition from high based carbon energy and its environmental impacts. This is in contemplation with the pressure to reduce Green-House Gas (GHG) emission and transition to Clean and Renewable Energy.
- A platform that aid juxtaposition of Company’s operations with the obtained Insurance coverages would enhance the pace of the Regulators’ oversight on the appropriateness of products offering to the Market. Proper profiling of the entities’ coverages will compel joint collaboration and facilitation of knowledge sharing in ways optimally beneficial to both Industries.
- The Disclosure and Reporting requirement of Section 49 of the NOGICD ACT is to ultimately enhance regulatory decisions that will benefit the Oil and Gas Industry and the Nation at large.
- Another merit of the collaboration as highlighted in the blueprint between the Board and the Commission is to bridge the identified knowledge gap in the demand and supply sides of the oil and gas insurance value chain. This would not have been possible where there is no special vehicle of research and development which engine is the access to information and data from both the suppliers and consumers.
The Executive Secretary of NCDMB, Engineer Simbi Wabote, who was represented by Mr. Daziba, Patrick Obah, Director, Corporate Services, emphasised that collaboration and stakeholder engagement remains the way forward for effective synergy between the oil/gas sector, NCDMB and operators in the insurance sector.
Obah maintained that the insurance sector in Nigeria has a fertile ground to grow with the NCDMB Act.
He lamented however that Nigerian-owned companies are the greatest challenge in promoting local content in the nation’s oil and gas sector.
