The National Insurance Commission (NAICOM) has read the riot act to insurance companies and broking firms on oil and gas insurance just as the insurance supervisory body released guidelines on oil and gas.

Commissioner for Insurance, Chief Okechukwu Chukwulozie, at a meeting in Lagos with representatives of the Insurance sub-sectors and trade groups concerned, warned that the era of ceding business abroad without exhausting local capacity or getting due approval from the commission would no longer be condoned.

Chukwulozie said the commission must be duly informed and updated on oil and gas business be it from a broker or insurance company, adding that such company must get clearance from NAICOM or be penalised.

According to him, "no insurance company which gains access to any oil and gas account either from the Nigerian National Petroleum Corporation (NNPC) or any other source for that matter can cede them abroad without satisfying local insurance industry.

"It is a breach of the law to do so and NAICOM will definitely take appropriate sanctions against such insurer. Please be reminded that as stipulated in Sections 43 and 72 of the Insurance Act 2003, any person who transacts an insurance or reinsurance business with a foreign insurer or reinsurer (without written permission from NAICOM) commits an offence and is liable on conviction to five times the premium involved or an imprisonment for three years or both.

"Similarly, under Section 43 of the Act, any broker who undertakes reinsurance broking without the approval of the commission shall be liable on conviction to a fine of N250,000 and in addition the reinsurance transacted shall be null and void. This might include forbidding the company from further participation in the oil and gas business," he said.

He said what the commission was doing was in the best interest of the entire industry. "We are prepared to pull the Nigerian insurance industry out of the woods and make it a beautiful business bride," he said.

He disclosed that NAICOM had written to the Minister of Transport on the importance of insurance cover for the construction and maintenance of a modern railway in the country that was recently awarded to a Chinese firm.

Meanwhile, the commission has released guidelines for oil and gas insurance business, following the Federal Government's local content policy from 45 per cent target from 2006 to 70 per cent by 2010.

The guidelines, he said, had taken effect immediate from the day they were released, January 12, 2007, stating that all insurance arrangements pertaining to oil and gas would henceforth be treated in line with Sections 3, 36, 43, 45 and 72 of the Insurance Act 2003.

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By Patience Saghana

Vanguard (Lagos)
NEWS

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