COVID-19: Insurers Lose $500m Aviation Business
Insurance firms have lost $500 million or N1.88 billion in aviation business, The Nation has learnt.
This loss is a fallout of the closure of the airspace to commercial flights by the Federal Government following the outbreak of Covid-19 pandemic.
Former President, Chartered Insurance Institute of Nigeria (CIIN) Mrs. Babington Ashaye said the loss would be highly disruptive to the insurance industry.
Babington-Ashaye, who is also the Managing Director, Risk Analyst Insurance Brokers Limited, stated that the huge loss arose from the 65 per cent of insurance premium returned to the aviation airlines, and others that were grounded by the pandemic.
Speaking over the weekend, she explained that the airlines were entitled to a return of 65 per cent premium out of the payment made to insurance firms because they the aircraft had been grounded in Nigeria and all over the world.
She added that because the airlines were not flying, it had also affected the sectors that are dependent on the aviation sector like hotels, among others.
She said the development had also depleted insurance brokers’income. She appealed to the Federal Government to come to the aid of the industry by giving palliatives, such as tax holiday to the operators.
She said: “With the aviation industry at a standstill for about three months following, insurance business from aviation has dwindled. Nearly all aircraft are grounded. The insurance industry is the mostly affected sector.
“Specifically, insurance companies can only retain 35 per cent of the full premium paid by airlines because they are all on ground and not flying.
This means that the airlines are entitled to 65 per cent of the premium which insurance companies are returning to them now. This applies if the airlines paid their premiums in advance
“Liability risk, which covers passengers while flying, will also be returned to the airlines. These are huge premiums lost to the industry.
Some airlines have also asked their staff to go on compulsory leave while some are making half-salary payments.
Also, because the airlines are not flying, it has affected the sectors that are dependent on the aviation sector like hotels, among others. At present, a lot of people are dying and insurance companies are paying claims.
“I believe that the Nigeria Insurers Association and the Nigeria Council of Registered Insurance Brokers (NCRIB) will have to come together and appeal to the government for tax holiday and favourable laws that can grow insurance business.”