Abuja: The aviation industry is widely recognised as one of the most capital-intensive and risk-sensitive sectors in the global economy. In Nigeria, where both the government and private investors are actively pursuing reforms to boost air transport safety, efficiency, and competitiveness, a robust aviation insurance system is absolutely essential.
According to News Agency of Nigeria, Mr. Ejiofor Ayogu, the Chief Executive Officer of Tasha Energy and Engineering Service Limited, highlighted the risks involved in aviation operations, which can result in significant financial losses. He emphasized that an aircraft accident, damage to an aircraft, loss of cargo, injury to passengers, or damage to airport facilities can expose airlines, airport operators, and other service providers to liabilities running into millions of dollars. Ayogu noted that insurance is not merely a regulatory requirement but is crucial for protecting investments, maintaining business continuity, and sustaining confidence in the aviation industry.
Mr. Ayogu further explained that for airlines, adequate insurance coverage is essential for protection against various operational risks. He also pointed out that Nigeria’s aviation industry requires substantial investment in multiple facets such as aircraft, maintenance facilities, and technology. As these investments grow, the value of assets exposed to aviation risks increases, making a strong insurance market vital for financial recovery from unexpected incidents.
Capt. John Ojikutu, CEO of Centurion Security and Safety, also spoke to NAN about the issues of cost and complexity associated with aviation insurance. He explained that Nigeria’s dependence on international reinsurance markets influences local insurance costs and availability. Ojikutu pointed out that while the 2022 Civil Aviation Act includes premium insurance values for airlines, it lacks specific values for Nigerian airports, contributing to higher fares on international routes from Nigeria.
Mr. Obafemi Bajomo, Senior Special Adviser on Foreign Direct Investments to the Minister of Aviation and Aerospace Development, noted that the Nigerian government is working to enhance local capacity to underwrite aviation risks. He mentioned the development of specialized aviation insurance products and efforts to strengthen local underwriting capacity. Bajomo also highlighted a regulatory framework unveiled by the Minister of Aviation and Aerospace Development, Mr. Festus Keyamo, aimed at making insurance for leased aircraft more feasible.
Furthermore, the Nigeria Civil Aviation Authority (NCAA) and the National Insurance Commission (NAICOM) recently signed a Memorandum of Understanding (MoU) for collaboration in aviation insurance regulation. This partnership aims to reinforce aviation safety, financial resilience, regulatory compliance, and protection for the traveling public, according to Capt. Chris Najomo, Director-General of Civil Aviation.
Mr. Olusegun Omosehin of NAICOM emphasized the importance of effective insurance protection as a regulatory requirement and risk management tool, highlighting the need for regulatory cooperation to ensure adequate and responsive insurance agreements. Stakeholders agree that prioritizing proper insurance coverage is essential for building a safer, more competitive, and economically productive aviation industry in Nigeria.