By Francis Ogwo
Insurance companies in Nigeria have lost $500 million (N1.88 billion) in aviation business as a result of the closure of the airspace to commercial flights by the Federal Government in the wake of the Covid-19 pandemic.
This was disclosed in a news interview by the former President, Chartered Insurance Institute of Nigeria (CIIN), Mrs. Babington Ashaye who added that the loss would have a negative impact on the insurance industry.
According to Babington-Ashaye, who is also the Managing Director, Risk Analyst Insurance Brokers Limited, the huge loss arose from the 65% of insurance premium returned to the aviation airlines, and others, which were halted by the pandemic.
She was of the view that airlines were entitled to a return of 65% premium out of the payment made to insurance firms because the aircraft had been grounded in Nigeria and all over the world, and because the airlines were not flying, it had also affected the sectors that are dependent on the Aviation sector like hotels, among others.
Babington-Ashaye also noted that the development had also affected insurance brokers ‘income and urged the Federal Government to save the industry from collapse through palliatives, such as tax holiday to the operators.
In her words: “With the Aviation industry at a standstill for about three months following, insurance business from aviation has dwindled. Nearly all aircraft are grounded. The Insurance industry is the mostly affected sector.
“Specifically, insurance companies can only retain 35% of the full premium paid by airlines because they are all on ground and not flying. This means that the airlines are entitled to 65% of the premium which insurance companies are returning to them now. This applies if the airlines paid their premiums in advance
“Liability risk, which covers passengers while flying, will also be returned to the airlines. These are huge premiums lost to the industry. Some airlines have also asked their staff to go on compulsory leave while some are making half-salary payments.
‘’Also, because the airlines are not flying, it has affected the sectors that are dependent on the Aviation sector like hotels, among others. At present, a lot of people are dying and insurance companies are paying claims.
“I believe that the Nigeria Insurers Association and the Nigeria Council of Registered Insurance Brokers (NCRIB) will have to come together and appeal to the government for tax holiday and favorable laws that can grow insurance business.” She concluded.
The Chartered Insurance Institute of Nigeria (CIIN) is the premier professional body in Nigeria that caters for the membership and professional needs of Insurance practitioners by providing them with the platform for continuous development.