Aircraft insurance premiums plummet on safety concerns

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New awareness of Nigeria’s safety record has led to lower premiums being paid, especially for wide-body aircraft. The safety record that the country has achieved so far over the past few years has pushed premiums for wide-body aircraft from $800,000 to $150,000 to $200,000 annually.

Aviation insurance covers not only the operation of aircraft, but also all associated risks. Until now, Nigeria’s aviation insurance premiums were recognized as the highest in West Africa. In recent years, Nigerian airline insurance premiums have exceeded what airlines in Ghana, South Africa and other African countries pay to insure their aircraft.

THEWILL said the perception of Nigeria as a high-risk environment and the high premiums demanded by local insurers have led local operators to consistently pay higher amounts when insuring aircraft. Collected. Nigerian airlines pay 8% to 10% of the value of their aircraft in premiums, while airlines operating in Ghana, South Africa and other African countries pay 2% to 3%. is the same as

Airlines operating in Europe and the US pay between 0.5% and 1% to insure the same aircraft.

For example, airlines operating in Nigeria pay an average of $1 million per year for insurance on their B737-300 aircraft, whereas airlines in Ghana or the United States spend between $200,000 and $30,000 on insurance for the same type of aircraft. I am paying millions of dollars. Added to this is the fact that all aircraft parked on airport ramps are guarded by security guards at the airline’s expense, which adds to operating and leasing costs, especially wet lease aircraft. It will be added.

Insurance is therefore of great importance in aviation as it is seen as a strategic industry not only because of its economic growth potential but also because of its important role in the country’s development and regional integration.

In Nigeria, for example, indigenous airlines face significant challenges in the form of high insurance premiums, multiple taxes, foreign exchange issues, high jet A1 costs, and unfavorable policies. Nevertheless, aviation insurance is now one of the largest subsectors in the global insurance market.

Accidents and incidents can occur in operations, so insurance is essential. For example, since his 1925 when the first aircraft flew across the skies of Nigeria, he has had over 60 military aircraft crashes and a total of over 100 aviation accidents in Nigeria. Still, many people mistakenly think that only pilots and aircraft owners need aviation insurance, which is completely not the case.

Insurance professionals serve aircraft owners, charter service or airline operators, commercial or recreational airline pilots, baggage or ground handling services, refueling aircraft, commercial drone operators, and aircraft garage and airport owners. We have listed people who need aviation insurance, including

Experts say this is because aviation insurance insures passengers, cargo and third parties, rather than just covering the physical aircraft. As a result of these demands, the Parliamentary Joint Committee on Aviation recently emphasized the need to provide the sector with sufficient funding to be able to meet the growing demand for air travel.

Two committee chairs of the Senate and House of Representatives, Senators Abiodun Orjimi and Nolim Nagy, observed during their oversight visits to the Accident Investigation Bureau (AIB) and the Nigerian Airspace Administration (NAMA) that more Existing aviation infrastructure that needs to be invested in.

In his welcoming remarks, NAMA Managing Director Matthew Pwadjok thanked the committees of both houses of the National Assembly for their interest and concern about issues affecting the aviation industry. He acknowledged that the speedy passage of his six administrative bills on the aviation industry truly reflected their commitment to advancing the domestic air transport sector.

At AIB, members of the Joint Committee were impressed with the progress made so far in upgrading the station’s facilities and personnel, which has led to minimizing accidents in the country.

Nnaji emphasized that members were impressed that the country had not recorded a fatality in the past seven years, with the exception of a helicopter accident in Opebi, Lagos in early 2021.

AIB Commissioner Aviation Engineer Akin Olateru told lawmakers in a welcome remark that a significant reduction in aviation accidents in Nigeria has led to lower insurance premiums paid to operate aircraft in Nigeria. Told.

According to Olateru, the high safety record the country has achieved so far over the past few years has driven insurance premiums for wide-body aircraft from $800,000 to $150,000 to $200,000 annually.

He also told two parliamentary committees that the Secretariat had set the pace for aviation safety in Africa by creating the continent’s first training institute for accident investigators.

Meanwhile, the current statute regulating insurance business in Nigeria is the Insurance Act 2003. The Act applies to all insurance businesses and insurance companies. Aviation insurance business is classified as non-life insurance.

In Nigeria, the Nigerian Civil Aviation Authority is responsible for ensuring that everyone involved in the aviation business complies with minimum aviation requirements to ensure compliance with potential indemnification obligations of airlines.

Pursuant to the Civil Aviation Act, any carrier or airfield operator, aviation fuel supplier, or provider of ground handling services, meteorological services, air traffic control services, aircraft maintenance services, or any other class of related service permitted by the authorities; Provider Determines in writing from time to time that air transportation services operating to, from or within Nigeria shall maintain adequate insurance coverage and liability for damages shall be upheld by a third party for a specified amount. Possibly and, in the absence of such insurance, sufficient grounds for refusal, suspension or revocation of authorization to operate air transport services in Nigeria.

The Nigerian Civil Aviation Authority also requires airline operators to provide copies of valid insurance policies demonstrating payment of insurance premiums and policies on a quarterly basis.

Regulation 18.11.17 of Nigeria’s CAR-Air Transport Economic Regulations, 2015 stipulates the maximum takeoff weight (MTOW) of the aircraft as the minimum third party liability insurance coverage for aircraft engaged in the operation of aircraft in Nigeria. increase. The regulation also stipulates minimum insurance coverage for the carriage of passengers, mail and cargo as the number of available seats on the aircraft.

Almost 100 years ago, Lloyd’s London was the first to offer insurance in the aviation industry before World War II in 1914.

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