Oil Firms’ Claims From Underwriters Hit N3.92 Bn

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Insurance claims paid to operators, who suffered various losses in oil and gas sector including the Nigerian National Petroleum Corporation (NNPC), have risen steadily from N1.35 billion to N3.92 billion in the space of three years, New Telegraph has learnt. The steep rise in claims is not unconnected with successive attacks on oil facilities by militant groups in the Niger Delta region. Investigations by this newspaper revealed that while insurers parted with N1.35 billion in 2012, the claims rose to N2.03 billion in 2013 before hitting over N3 billion in 2014.

According to a document obtained from the Nigerian Insurers Association (NIA), 16 insurance companies were involved in the payment of over N3 billion at various times within the period. A breakdown of the claims shows that Custodian and Allied paid out the highest claims of over N1.7 billion to over 10 oil firms including NNPC, Eleme Petrochemicals, Total E & P Nigeria Limited, Sterling oil Exploration and Energy, Afren energy Services, among others.

On its part, AIICO Insurance, following Custodian in that order, parted with N713.35 million as part of meeting its obligation to the policyholders. Its major claimants, among others, were Shell Petroleum Development Corporation, which received N120 million; Mobil Producing Nigeria Unlimited, N162.23 million; NNPC, N105.60 million as well as Sterling oil Group of Companies, N70.20 million.

Also listed in the document are Consolidated Hallmark Insurance (N56.67 million); Cornerstone Insurance Plc (N64.68 million); Ensure (N15.48 million); Equity Assurance (N106.02 million); great Nigeria Insurance (N14.97 million); Guinea Insurance (N75.70 million) and KBL (N128.12 million).

Others are Linkage Assurance (N194.00 million); Mutual Benefits (138.01 million); Staco (N124.98 million); Standard Alliance (N295.25 million); Sterling Assurance (N85.61 million); UnityKapital (N107.38 million), and Universal (N14.10 million). Not left out among the underwriters who met their obligation is Niger Insurance.

The firm met its obligation to policyholders with over $1.93 million. Among the beneficiaries were Mobil Producing Nigeria Unlimited ($523,332); Elemepetrochemical ($37,132); Chevron ($750,000); Sterling Oil Exploration ($234,000); Afren ($196,853.56); NNPC ($124,500) and SDPC ($69,240).

Prior to the latest report, the underwriters had earlier paid N2.03 billion with over N721 million paid for Group Life and another N1.35 billion for material losses. According to the breakdown, nine insurance companies paid for the Group Life cover while 11 others paid for the material damages.

The firms that met their Group Life obligations included African Alliance Insurance Plc, ARM Life Plc, Capital Express Assurance Limited, Custodian Life Assurance Limited, and Industrial and General Insurance Co. Plc. Others are Lasaco Life Assurance Co. Limited and UBA Metropolitan Life Limited.

Some of the oil and gas firms that received claims apart from the NNPC are Nigerian Agip Oil Company Limited, Platform Petroleum Limited, Seplat Petroleum Development Company Limited, Chevron Nigeria Limited and Saipem Contracting Nigeria Limited. Others are Mobil Producing Unlimited, Ministry of Petroleum and Total E& P among others. On the other hand, NNPC earned the highest amount of claims in the material loss category totaling about N868.17 million.

The underwriters that made the payments include AIICO Insurance Plc, Continental Reinsurance Plc, Custodian and Allied Insurance, and Guinea Insurance. Others are Sovereign Trust, Union Assurance, Linkage Assurance and Mutual Benefits. Last year, local underwriters insured the NNPC for a premium of $73.7 million (N14.66 billion). The premium slightly fell from $79.4 million in 2014 and the single largest that the indigenous underwriters have earned over the years.

The breakdown further revealed that while AIICO paid a total of N277.09 million to its oil and gas policyholders, Continental Reinsurance paid out N527.27 million. Similarly, Custodian and Allied paid N717.18 million just as Guinea Insurance doled out N103.73 million.

Not left out in the deals are Linkage Assurance, N12.42 million; Mutual Benefits, N191.57 million; Niger Insurance, N3.64 million and Old Mutual, N11.16 million. Others are Prestige Assurance, N233.70 million; Sovereign Trust, N766.17 million and Union Assurance, N130.85 million. Other operators that benefited from the claims are Total Exploration & Production, Nigerian Agip Exploration, Moni Pulo Limited, Chevron Nigeria Limited, British Oil and Gas Exploration and Addax Petroleum Development Nigeria Limited.

The list also includes Walter Smith Petroman Oil Limited, Britania U Nigeria Limited, Shoreline Power Company Limited, Walter Smith Oil Limited, SNEPCO and Seawolf Oil Field Services Limited. This newspaper recalls that local underwriters recently boosted their oil and gas retention to 60 per cent in some major businesses and 100 per cent in negligible cases.

The oil and gas guidelines released by the National Insurance Commission (NAICOM) permit all eligible insurers to participate in any oil and gas insurance subject to the limitation stipulated in the operational licence.

The industry regulator had anticipated the retention rate to rise to 30 per cent when it established the Nigerian Oil and Gas Insurance Pool with an initial capacity of $20 million.

Source: New Telegraph

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