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The National Insurance Commission (NAICOM) has revealed plans to lead deliberations at the 2023 National Confab on ‘Building Local Content Synergy between the Insurance Industry and Oil and Gas Sector.’
The local content law in the country requires that 70 per cent of the total premium on the oil and gas sector should be undertaken by the local insurance companies, while their foreign counterparts could take 30 per cent.
Unfortunately, the implementation has been stalled by low capacity and other challenges.
Local content law in the case of the insurance sector has been a major worry to stakeholders as major large risks in the oil and gas sector are been insured by foreign companies.
There has not resulted in huge capital flight from the economy but reduced the risk retention capacity of local firms. The situation has made the nation’s insurance industry the weakest link in the financial services sector, contrary to what happens in other climes where the insurance sector constitutes a strong asset base for major projects, especially infrastructure.
The Guardian checks at the weekend revealed that the lack of the full implementation of the Local Content Act in oil and gas risk coverage has contributed to the challenge by the sector.
The Local Content Act is fully implemented in the country, it will improve the insurance sector’s contribution to the gross domestic product (GDP).
Low capitalisation also limits the capacity of local operators to play in the big underwriting league of the oil and gas, aviation, and maritime sectors.
To address the challenge in the industry, the Commissioner for Insurance, Sunday Thomas, said the regulator will participate in the conference being organised by STANMEG Communications, publishers of Oriental News Nigeria Online, as keynote speaker.
The event, which is scheduled to hold on Tuesday in Lagos, will examine key issues that might be posing challenges for the industry in exploring huge opportunities provided by the Local Content Act.
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