The threat by Lloyd’s of London that it will blacklist the country has forced the Airline Operators of Nigeria (AON) to run to Federal Government asking for foreign exchange for its members.
Lloyd, the world’s leading insurance market, had 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 pay their premiums regularly.
The company’s representatives, who visited Nigeria recently, noted that the Nigerian market was a high risk market with the volume of business modestly small and airline brokers not paying their premiums.
They warned that in view of the fact that airlines brokers in Nigeria had in recent times failed to pay their premiums, the Lloyd’s market might have no other choice than to blacklist the country.
The Chairman of AON, Capt. Nogie Meggisson, made the appeal in a statement issued in Lagos said the development might have far-reaching consequences for the aviation industry and the country.
He said the airlines claimed they had naira but could not pay premiums because of foreign exchange constraints.
According to him, Lloyd’s market accounts for about 92 per cent of reinsurance of airlines globally, five per cent by Russian market, Cyprus and others, while the remaining is retained locally worldwide.
“The Nigerian market is grossly unable to effectively underwrite risks in aviation because of the high exposure of an average 500 million dollars 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 six billion dollars.
“Virtually 100 per cent 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.
The AON chairman said a blacklist would lead to over 300 per cent rise in premiums because of the high risk and as such Nigeria should do anything possible to avert it.
He said :” We are not keeping to payment dates. Domestic carriers have a four-month backlog on payment. It will be funny to wait until there is an incident before the airline tries to pay its premium.
“We therefore use this medium to call on Minister of State, Aviation, Sen. Hadi Sirika , to as a matter of urgency, come to the aid of domestic airlines operating in the country.
“This can be done by forging a joint working group with the Federal Ministry of Finance and the Central Bank of Nigeria to brainstorm and cross-fertilise ideas on how the nation can take exigent steps to forestall a potential backlash on the Nigerian economy and totally avoid the blacklist in the interest of safety and economic prosperity of the country.’’