* Logo Source : www.lloydrailsystems.com
…As AON Chairman Appeals To Sirika To Intervene
…Says Domestic Airlines Have Four Months Backlog Of Unpaid Premium
…Warns Carriers Not To Wait For Incident To Happen Before Making Payment
Lloyds of London, the world’s leading insurance market, has issued a warning to Nigerian airline operators that it might be forced to blacklist the country in the face of continued failure of some operators to fulfill their obligations of paying their premiums to the insurer regularly.
This is just as the Chairman of Airlines Operators of Nigeria (AON),Capt Nogie Meggison called on the Minister of State, Aviation, Senator Hadi Sirika to urgently intervene in the matter to prevent Lloyd from carrying out its threat.
Representatives of Lloyds of London market, who were in Nigeria recently, noted that the Nigerian market is a high risk market yet the volume of business from the country is quite modestly small and that airline brokers are not paying their premium.
As result the insurance giant cautioned that in view of the fact that airlines brokers in Nigeria have in recent times failed to pay their premiums the Lloyd’s market might have no other choice than to blacklist the country which might have far-reaching consequences for the aviation industry and the country to a large extent.
However, the Chairman of Airlines Operators of Nigeria (AON),Capt Nogie Meggison disclosed that the airline operators in the country are lamenting that they have Naira but that they cannot pay the premiums due to Foreign Exchange(Forex) constraints.
He revealed further that Lloyds market accounts for about 92 per cent of reinsurance of airlines globally, 5 per cent by Russian market, Cyprus and others, while a mere 2 per cent is retained locally worldwide.
He stated that the Nigerian market is grossly unable to effectively underwrite risks in aviation because of the high exposure of an average $500 million for just one airplane to cover hull, war and third party liability.
He added that when this figure is multiplied by the number of aircraft operating in the country it becomes clear that Nigerian insurance companies cannot cope considering the enormous volume of resources needed to cover all those aircraft of which the total coverage value will be in excess of $6 billion.
According to him, “Virtually 100 per cent of the aircraft being operated in Nigeria are re-insured in the Lloyd’s market. Hence, Nigeria can’t afford to be blacklisted as a nation because this will have very grave and deleterious consequences, as the entire domestic airlines will shut down since airplanes can’t be operated without being insured,”
He stressed that it would take some days at best to switch to the secondary market of Russia and China, whose premiums would also have skyrocketed if Nigeria is eventually blacklisted by Lloyds.
According to Meggison “A blacklist will certainly have a negative impact on the Nigerian economy arising from inability to acquire aircraft from Lessors with no insurance, total suspension of operations by airline charter and oil support helicopters, job losses, and other sectors being reinsured by Lloyds market such as oil rigs, vessels, high rise buildings, airports and terminal buildings etc. Similarly, a downgrade or outright blacklist will mean very high premiums due to high risk levels.”
The AON boss cautioned that if Nigeria is blacklisted from Lloyds market, operators might have a difficult time getting their aircraft insured because the alternative is the Chinese or Russian markets, which according to him might find it hard to absorb Nigerian airlines due to the fact that Lloyds has blacklisted them.
He said that if Nigeria is blacklisted the premiums will rise by 300 per cent due to the high risk, adding that even the National Carrier of Russia, Aeroflot Airlines has 98 per cent of its risks underwritten by Lloyds of London market while 2 per cent is retained locally in Russia and so is Air China.
In his words, “We are not keeping to payment dates. Domestic carriers have a four months backlog on payment. It will be funny to wait until there is an incident before the airline tries to pay its premium,”
He called the Minister of State Aviation, Senator Hadi Sirika to intervene as a matter of urgency to prevent Lloyds from blacklist Nigeria airline operators.
He continued, “We therefore use this medium to call on the Honourable Minister of State Aviation, Senator Hadi Sirika to as a matter of urgency come to the aid of domestic airlines operating in the country by forging a joint working group with the Federal Ministry of Finance and the Central Bank of Nigeria to brainstorm and cross-fertilise ideas on how the nation can take exigent steps forestall a potential backlash on the Nigerian economy and totally avoid the downgrade/blacklist in the interest of safety and economic prosperity of the country.
