The journey to make the Nigerian insurance industry the hub of oil and gas underwriting has got off the starting line for an endurance race – a marathon that the two regulatory actors: National Insurance Commission (NAICOM) and the Nigerian Content Development and Monitoring Board (NCDMB), are committed to deploy all resources to run the race of enforcement only slowing down to refresh and continue on the enforcement route again.
The authority to make the insurance industry the beneficiary and under obligation to provide all insurance services from risks acceptance to claims payment first, comes from the Insurance Act 2003 which made far reaching provisions for the domestication and domiciliation of insurance services in Nigeria. In particular, section 65 (7) of the Insurance Act made it compulsory for any property located in Nigeria whether moveable or immovable to be insured by a Nigerian registered insurer. Section 67 requires that insurance of all inputs into Nigeria must be insured by insurer registered in Nigeria.
Besides, section 72 prohibits any person from transacting insurance or reinsurance with foreign insurance/reinsurance except with the written permission of the Commission.
Second, is the Nigerian Oil and Gas Industry Content Development Act 2010 which made unencumbered reference to insurance content, and clears that where an operator seeks to place an insurable risk offshore, a written approval of NAICOM must first be sought and obtained and that NAICOM, prior to the issuance of the approval, must first determine that “…local capacity has been fully exhausted.”
The firm provisions created a NAICOM/NCDMB team that was consistent, persistent and rigorous in engagement to culminate in the endorsement of NAICOM/NCDMB guidelines by the two bodies in Yenagoa, Bayelsa State.
The two signatories to the guidelines, Commissioner for Insurance, National Insurance Commission, Mr. Sunday Thomas and Engr Simbi Kesiye Wabote, were profusely delighted for the collaboration results. The ground breaking ceremony so to speak was over a decade ago, when the guidelines for oil and gas was issued in 2010 which amongst others, stipulates the roles and responsibilities of insurance institutions in ensuring compliance with local content law. Thomas says, “This was done with the primary consideration of ensuring that available in-coming insurance capacity is fully filled before any foreign consideration.”
“The overall aim of the guideline is the development of indigenous content through increased indigeneous partcipation. The NOGICD Act 2010 was therefore applauded by the entire insurance industry as it greatly complemented the National Insurance Commission roles and responsibilities in performing its regulatory and supervisory oversight function.
“In similar vein, sections 49 and 50 of the NOGICD Act specifically relate to insurance & reinsurance and approval for offshore insurance respectively. The Act also contains a schedule with recommended minimum levels of Nigerian content measured by percentage spend,” he stated.
The commitment the federal regulators to build an insurance fort that could accommodate large ticket of oil and gas risks on an ongoing process was applauded by both. And Wabote says “The success of our engagement earmarked by this launch of the insurance guidelines further attests to my belief that the local content enforcement and implementation is not a sprint but a marathon.”
Wabote exudes confidence that leakages hitherto in the 2010 Act are now sealed by the guideline and the Act now has a full course to run as it relates to insurance capacity building. His expression, “I am delighted to announce that this insurance guidelines addresses loopholes that have been identified by the board in implementing the provisions of the NOGICD Act, particularly section 49 and 50.
He said the essence of the Act is to ensure the full utilisation of available in-country capacity in the insurance sector before seeking offshore insurance services. Pointing to envisaged local strong capacity for oil and gas insurance, he said, “This is expected to support retention of capital in-country and build capacity of Nigerian insurance companies in the oil and gas industry.”
The reach of the Board go beyond insurance local content, the Executive Secretary slam dunks this saying, “this event is another step by the board to attaining 70% of Nigeria content in 2027 under the Board’s 10 year strategic roadmap.
Noting that the NOGICD Act has put the peculiar oil and gas industry on same collaboration pedestalwith NAICOM, Thomas said, “the overall aim of the guideline is the development of indigenous content through increased indigenous participation, which he said has been applauded by the entire insurance industry and completes the Insurance Act.
Thomas said the objective of the guidelines is to enforce and strengthen compliance with the provisions of the referred sections of NOGICD Act and relevant provisions of the Insurance Act with respect to companies carrying on insurance business in the Nigeria oil and gas industry is to also enable the Board monitor utilisation of in-country insurance capacity.
Thomas speaks to all stakeholders, “I therefore implore all operators, project promoters, alliance partners and Nigerian indigenous companies engaged in any form of business operations or contract in the Nigeria oil and gas industry to note that the sighted relevant laws have demanded our adherence and continued compliance, hence the issuance of guidelines.”