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‘Only Insurance Brokers Can Place Oil Risks’

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‘Only Insurance Brokers Can Place Oil Risks’



By Nnamdi Duru, 05.12.2010
Only registered insurance brokers can place risks in the oil and gas sector of the Nigerian economy on behalf of the insured, as stipulated under the Nigerian Content Development Act, 2010, stakeholders have been informed.
This clarification was made by an insurance expert, who was also a member of the Federal House of Representatives, Hon. Lanre Laoshe, while speaking with THISDAY in Lagos. He described the new law as “a brilliant and excellent one”, which seeks among other things to put in place a legal framework for the continuous growth of Nigerian content in the economy.
 According to him, the law made it mandatory for all insurance businesses in the sector to be transacted through a middle man i.e. an insurance broker registered with the National Insurance Commission (NAICOM) and the Nigerian Council of Registered Insurance Brokers (NCRIB).
 He also stated that under the new dispensation, no insured, including oil multinationals, can place the risks itself or through its captive company outside the country, adding that it must engage the services of a Nigerian insurance broker who places the risk on its behalf with a Nigerian insurance company.
 “Note that the law provides that all insurance businesses in the sector should be underwritten by a Nigerian insurance company through a Nigerian insurance broker”, Laoshe stressed.
The expert also dismissed the fear of some stakeholders who argue that the local operators do not possess the necessary skills and expertise to underwrite such mega risks, saying such inadequacies have been already been taken care of by the new oil and gas law.
 He maintained that only the local operators are empowered to determine where the services of foreign experts are needed and engage relevant professionals to do such jobs on their own terms, and not the insureds engaging foreign operators themselves.
The contracts for risk protection at whatever level in the oil and gas industry should be between local operators and the oil stakeholders only, with no foreign intervention, he added.
 The former Federal Legislator highlighted the advantages attached to the arrangement, saying, “the import of this is that the Nigerian broker is the one who should handle the business and he will benefit from it and create jobs locally for Nigerians, and not what happened in the past where a broker based in London will stay there and start dictating what will happen in the country’s oil sector”.
 “The Nigerian insurance broker is expected to strategise towards growing local capacity and skill for such high level oil and gas risks underwriting in the process and the skills transfer mechanism would be incorporated into his plans, which will be executed by this means”, Laoshe added.
 He expressed preference for empowerment of citizens through job creation as against the current trend of distributing money and materials to Nigerians under the poverty alleviation programme of various tiers of governments in the country.
“The creation of jobs in this direction is better than the alleviation of poverty that government is doing and as such, government should only provide an enabling environment for jobs to be created in the country”, he said.
 President Goodluck Jonathan recently assented to the Oil and Gas Industry Content Development Bill, 2010. The new law, according to him, will “address the compelling need for us as a nation to have indigenous participation in the oil industry”, emphasising that it shall “apply to all matters pertaining to Nigerian content in respect of all operations or transactions carried out or connected with the Nigerian Oil and Gas Industry”.
“Henceforth, there shall be exclusive consideration to Nigerian indigenous service companies, which demonstrate ownership of equipment, Nigerian personnel and capacity to execute jobs in the Nigerian Oil and Gas Industry”, the President directed.



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