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| Captain Nogie Meggison |
The Chairman of Airline Operators of Nigeria(AON),
Captain Nogie Meggison has raised concern that the Lloyd’s 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.
He made this known through a statement that: “Representatives of Lloyd’s 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
airline brokers are not paying their premium. To this end, they 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.”
Meggison disclosed that the Airlines said they have
Naira; but that they can’t pay the premiums due to forex constraints. He
revealed further that Lloyd’s market accounts for about 92% of reinsurance of
airlines globally, 5% by Russian market, Cyprus and others, while a mere 2% is
retained locally worldwide. The Nigerian market is grossly unable to
effectively underwrite risks in aviation because of the high exposure of an
average $500million for just one airplane to cover hull, war and third party
liability. When this figure is multiplied by the number of aircraft operating
in the country it becomes clear that Nigerian insurance companies can’t cope
considering the enormous volume of resources needed to cover all those aircraft
of which the total coverage value will be in excess of $6bn.
“Virtually 100% 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. It will take some days
at best to switch to the secondary market of Russia and China, whose premiums
will also have skyrocketed if we are blacklisted by Lloyd’s.
Meggison added that: “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.”
Furthermore, the AON Chairman cautioned that if Nigeria
is blacklisted from Lloyd’s market operators might still have a difficult time
getting their aircraft insured because the alternative is the Chinese or
Russian markets which might find it hard to absorb them due to the fact that
Lloyds has blacklisted us.
He said, for instance, that if Nigeria is blacklisted the premiums will rise
by 300% due to the high risk, adding that even the National Carrier of Russia,
Aeroflot Airlines has 98% of its risks underwritten by Lloyds of London market
while 2% is retained locally in Russia; so is Air China.
“We are not keeping to payment dates. Domestic carriers
have a 4-months backlog on payment. It will be funny to wait until there is an
incident before the airline tries to pay its premium,” Meggison warned.
He pleaded to the Federal Government to look into the
issue, “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-fertilize 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.”
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