How Insurance Could Transform Nigeria’s Shipping Sector – Gbolahan

By Kenneth Jukpor

Mr. Adu Gbolahan works with FBL Insurance brokers as a business development officer. He has over a decade experience in marine insurance and was among the previous executives of Nigerian Ship-owners Association (NISA)as a welfare officer. In this exclusive interview with MMS Plus, he reveals how the insurance sector could help transform Nigeria’s shipping. Enjoy it:

Over the years, the problem of the carriage of Nigerian crude on FOB and the need to put it on CIF for the country to benefit has been stressed. We know this means a lot for ship-owners, but how would you explain the effect on insurance companies?

Nigerian crude export is basically carried on FOB, so if it’s changed from FOB to CIF that has to do with the freight and insurance. One of the benefits of CIF is that the insurance would be done in a Nigerian company. It will increase the capacity base of the insurance companies because it is our crude and we have to be part of it. The insurance firms will also develop expertise in seeing that they reduce the risk. You cannot go to America, Mexico or China to trade and you won’t do the insurance domicile in those countries.

In the western world, like the United States of America or the United Kingdom, insurance firms own banks because their insurance transactions are big transactions. When they have the money, they can afford it because there is a lot of money coming in. They can easily afford to own a bank.

A lot of crude is being taken out of this country. Recently, the Nigerian National Petroleum Corporation (NNPC) announced that ship-owners will be beneficiary in the carriage of crude but I will not be surprised if NNPC also insists that they should do their insurance abroad. However, it is not helping us but if the insurance is done in Nigeria it would increase our capacity and also create more jobs for unemployed youths.  It’s going to help the ship owners, insurance companies as well as the insurance industry. When you keep a dollar account, it’s a huge account so everybody will benefit from it.

What relationship do insurance companies in Nigeria have with the global players and other insurance companies with regards to piracy and the risk on Nigerian waters. Is there a relationship or can we build such relationship?

Different insurance companies are partnering with a lot of global players like Lloyds. FBN insurance company is partnering with another global player in London called ALDO. Willis Insurance broker is not owned by Nigeria, it is owned by a company in the United Kingdom. Most of the multinationals have annex in Nigeria.  There is a lot of synergy and this will also generate and give them first hand information. They have the right information to give but most times the information is based only on what is seen on the internet. Internet does not provide the sufficient information needed. There is a body called Nigerian Insurance Association (NIA). These are the people that keep data of claims coming in, so they can tell you about the amount of claims that has entered in the last three months.

The maritime sector is very crucial and seen as the heart of businesses, but politics, state of the economy, forex and other issues that affects it. From your perspective, would you say insurance has grown or depreciated over the years, especially the aspect of marine insurance?

The players in the maritime sector do not really appreciate what we do. They trust people outside the country more. For example, in the maritime bank they are about to float, there should be someone at the managerial level that must be an insurance person.  Maritime is a very volatile business, it’s an international business and you need a professional that will be able to tell you about the risk element involved so that you can be able to recoup your investment.

The reason most ship-owners can’t rise up when they fall is that those vessels are not insured. If a piracy happens or there is collision, they can’t go back to insurance because they didn’t do it. But if they see the risk involved they will be able to involve insurance.  I have been in this business for over a decade.  I know quite a number of industry players, private players, but they don’t recognize us. We are not going anywhere; we will be there for them when they have any risk and to ensure that the claim is paid.

We also want to partner with them to get involved. There is nothing wrong with us coming on board with some of those committees. There is nothing wrong with us been a partner at the board level either at NPA, NIMASA and even the maritime bank, even though they have an insurance department.  But the insurance department they have is not as experienced as the people in the industry themselves. If they have professionals, we will be able to guide them and also reduce risk.

In the last decade, can you tell us about the major challenges in marine insurance and the prospect for the future?

The major challenge that we had in the past was that there were several fake marine insurance certificates. Then, with N500 or N1000 anyone could get the certificate of an insurance company in Apapa. Some of these companies were dead or didn’t ever exist. Some of the fake brokers had it on their system, so they just print it out. We have evolved from that era of fake certificates because we know the authentic ones. It is getting tougher and the regulators are insisting on how to go about it.

People can’t just issue certificate without going through the normal process and making payment that will also be verified by the banks. As a professional that has been in the industry for close to 14 years, I can’t see myself going to issue fake certificate because it’s going to dent my image. I believe that the industry has a lot of prospect. Very soon, Dangote is going to start production and I can tell you that Dangote refinery was insured.  I remember the Nigerian insurance broker that handles that but I wouldn’t mention his name. Secondly, by the time they are producing and they want to take it to other African countries, they will need ship-owners. So, it’s an avenue to make more money. There are lots of opportunities coming up.

 

From the research I did , I found out that some countries and regions have underwriting associations,  do we have that in Nigeria?

Yes we have. We call them NIA (Nigerian Insurance Association). Under that umbrella, we have a board and the board is headed by any of the Managing Directors of the underwriting companies. When I was in an underwriting company, my MD was the chairman and it’s being rotated every two years. They all take part in decision making. The primary body that makes decision is a regulatory body called NICON. They guide and give new policies.

Does the underwriting body have special interest in the maritime sector?

They believe that the maritime sector is under oil and gas, some put it under transportation. Those are the two layers. So, it depends on the nomenclature of the underwriting company. Some operate as transportation and maritime as well as aviation is under this category. While some others operate as oil and gas.

In the last few years, how much claims have been paid and how much confidence should ship-owners have especially the ones that operate in the region?

I’m not sure if they are really doing insurance because there nobody checks them. You don’t go on the sea and ask for certificate and because of that, they don’t buy insurance.

Which agency should be responsible for that?

I think NIMASA and NIWA. NIWA is for coastal trade but most of the time they will check other papers than insurance.

Insurance companies in Nigeria do not bear the whole of risk; they just take a small portion.  How do you explain that?

They do what we call re- insurance. There is a capacity they can take.  The re-insurance companies in Nigeria are about four in number. The capital base of these companies is different and as at last year, the capital base was N25billion. What they do is that they absorb the risk from insurance company and when there is a claim, the insurance company can approach them and tell them to pay the claim because they have taken part of the money. The percentage is based on the capacity of the insurance company. That capacity is based on the treaty that they get.

Can you tell us about your company and your experience over the years as well as your reason for choosing this career path?

I was in LASACO (Lagos State Assurance Plc) for eleven years before I joined FBL insurance brokers. It is a subsidiary of FBL Holdings and they have been around for close to twenty years. They deal with all underwriting companies in Nigeria including HMO. I joined them to contribute my quota in the business development unit. My beat over time has been maritime, and in the future I want my name to be among people that can be consulted for maritime insurance and made notable contributions to the sector’s growth.