Oil & Gas Underwriting, Experts Canvass for Level –Playing Ground

Notwithstanding the vast opportunities arising from insurance local content policy on oil and gas, operators have been tasked on providing a level playing field for all operators as well as blacking the leakages still going to foreigners, contrary to the provisions of the policy.
This position was canvassed by Adulphus Nwaeze, managing director of Trinity Consulting Group, while reviewing the performance of the policy so far.
According to him, “it is unethical for some operators to be discriminated against, particularly the brokers whose strategic position is crucial to the success of he policy.”
He stated that while the policy provided for at least 45percent of underwriting in the oil and gas for local insurers, only less than 10 percent is still being handled by local underwriters.
Nwaeze explained that it is unfortunate that some local companies still collude with foreigners to sell” out our rightful share under flimsy excuses.
He maintained that the preference for dollars over naira has been one of the tempting factors because foreign insurers are allegedly not enthusiastic about risks denominated in naira value.
The energy expert called on operators to develop a strategic charter and operational framework, identify leakages for necessary amendments as well as injecting a true Nigerian content opportunities into the policy.
This position had earlier been dwelt on at a forum by Mr. Wole Oshin, chairman of the Nigerian Insures Association.  According to him confronting local content policy goes beyond low capacity.  He said the inability of local underwriters to effectively markets themselves abroad is another challenge. 
The issue of effective local content policy has engaged experts’ attention in recent times. Earlier, Mr. Val Ujumah, managing director of First Bank of Nigerian Insurance Broker (FBNIB), said government’s desire of the local content policy may not be realized unless brokers are carried along. 
He stated that brokers have been sidelined in the selection of firms for the oil and gas insurance while also faulting the bidding processes for participation.
Of significance, he said, is the fact that contrary to current to practice, bidding for insurance should naturally be for brokers and not insurers.
Mr. Ujumah said what is in practice now is that the bidding processed is being controlled by one body.  He explained that the National Petroleum Investment Management Services (NAPIMS) appears to be the one controlling bidding.
He pointed out that it is the brokers who should be allowed to choose the insurers to work with and not for the insurers choose the re- insurers or broker as presently happening.
The local content policy on insurance was initiated by the Obasanjo’s administration.  The policy raised the level of indigenous participation in oil and gas underwriting to 45percent.  The policy which started in 2006 was first put at 10percent and is expected to rise to 70percent along the line.
Experts’ opinion is that with an enlarged position reserved for local underwriters, our economic life would be boosted.  The policy is also expected to boost the insurance industry which has been in limbo over a long time until recently.
The policy development is also expected to contribute substantially to the nation’s gross domestic product (GDP) which is projected to grow by more than 10percent.