The cost of insurance in the Nigerian aviation sector has risen from N11 billion annually in 2017 to about N13 billion annually, figures released by the Airline Operators of Nigeria (AON) have shown.
According to the association, Nigeria pays the highest premium among African countries that are not at war, just as it attributed the development to the increased level of risks associated with the country’s operating environment.
However, AON attributed the increase in insurance premium globally to the Boeing 737 Max accidents.
It also said the insurance premium paid in Nigeria was about 10 per cent of the total value of each aircraft in operators’ fleet.
The Chief Executive Officer of West Link Airline, which is based both in Ghana and Nigeria, Captain Ibrahim Mshelia, said in a recent chat with newsmen that the cost of aircraft insurance premium in Nigeria might be the highest “all over,” noting that Nigeria pays higher insurance premium for aircraft than Ghana because Ghana insurance companies do not go through many brokers; so, the premium is relatively lower.
He said: “Actually we are higher all over. You pay lesser premium in Ghana than in Nigeria because of the greed of our people. But in the United States I once paid insurance premium of $60,000; but in Nigeria, they can charge you as high as $200,000.
“Ghana pays less because they don’t go through many brokers but Nigerian insurance companies are becoming more competitive so things are changing. Everything is about how you negotiate with the company.”
The Executive Chairman of AON, Captain Nogie Meggison, who gave the N13 billion figure, also stated that what Nigerian airlines pay for insurance was higher than the insurance premium paid by airline operators in Ghana, Cote d’Ivoire, Senegal and other countries in West and other parts of Africa that are not at war.
He said in Europe and the United States, airlines were paying about one per cent of insurance premium being paid in Nigeria.
He added that in Nigeria if the sum assured is $800 million, the airlines pay a premium of 10 per cent but in the United States, if the sum assured is $800 million, they pay a premium of one per cent.
Megisson said Nigeria had been categorised as high risk and harsh environment for flight operations.
The CEO of Aero Contractors, Captain Ado Sanusi, stressed the need for a review of the local content law, urging the government to ensure that Nigeria is not categorised as a high country risk.
Sanusi also said global insurance went up because Nigeria was designated as high country risk, thus increasing the cost of insurance.