Nigerian airline operators are finding it extremely difficult to pay the premium on their assets such as aircraft and others, the Director, Policy and Regulations, Nigerian Insurance Commission, Leo Akah, said.
He said carriers were breaking the insurance premium into bits with some opting to do so monthly, some quarterly and others in pieces.
Akah disclosed this while speaking on the sidelines of a two-day aviation, cargo, and export conference in Lagos.
The NAICOM director stated that insurance premium was often raised any time there was a plane crash.
He noted that though aviation risks were low, they were high in severity and required strict legal framework and regulatory principles in the insurance sector.
He said, “Our law says no premium no cover and if you don’t pay, you are on your own. You can’t fly if you don’t have insurance. This is an issue. Even accessing foreign exchange to pay your insurance overseas is among the challenges in the sector. The insurance company won’t collect naira from you.
“It is not optional for you not to have insurance as an airline operator. If you don’t insure your liabilities for example, you cannot fly. We liaise with the Nigerian Civil Aviation Authority to ensure that whatever paper is submitted to them at NCAA is an evidence that you have insurance so that they can allow you to fly.”
The huge insurance premium in the aviation sector is impacting on the cost of operations of airlines, which are transferred to consumers.
However, despite Nigeria’s low air crashes, insurance firms, especially those based overseas, charge the country’s airline operators high insurance premiums, a situation which has been attributed to the bad rating of the continent’s airlines in terms of safety.