By Gabriel Agbeja, News Agency of Nigeria (NAN)
The aviation industry is widely recognised as one of the most capital-intensive and risk-sensitive sectors in the global economy.
In Nigeria, where both the government and private investors are actively pursuing reforms to boost air transport safety, efficiency, and competitiveness, a robust aviation insurance system is absolutely essential.
From aircraft hull and passenger liability to airport infrastructure, cargo, ground-handling operations and third-party risks, insurance provides an essential financial safety net for the aviation industry.
Yet, as Nigeria seeks to unlock the full economic potential of its aviation sector, stakeholders believe that strengthening aviation insurance should form an integral part of the industry’s development strategy.
Speaking with the News Agency of Nigeria (NAN), Mr. Ejiofor Ayogu, the Chief Executive Officer of Tasha Energy and Engineering Service Limited, said aviation operations involve risks that could result in significant financial losses.
According to him, an aircraft accident, damage to an aircraft, loss of cargo, injury to passengers or damage to airport facilities can expose airlines, airport operators and other service providers to liabilities running into millions of dollars.
“Insurance therefore goes beyond being a regulatory requirement; it is an important instrument for protecting investments, maintaining business continuity and sustaining confidence in the aviation industry.
“For airlines, adequate insurance coverage can provide protection against aircraft damage, passenger claims, third-party liabilities and other operational risks.
“For financial institutions and investors, a robust insurance framework provides greater assurance that aviation investments are protected against unforeseen events.”
He said that Nigeria’s aviation industry required substantial investment in aircraft, maintenance facilities, airport infrastructure, navigation systems, technology and human capital.
Ayogu said that as airlines expanded their fleets and airports underwent modernisation, the value of assets exposed to aviation risks continued to increase.
“A strong insurance market can help reduce the financial consequences of unexpected incidents while enabling operators to recover more quickly from losses.
“This is particularly important for Nigerian airlines, many of which operate in an environment characterised by high operating costs, foreign exchange challenges, expensive aviation fuel and significant maintenance expenses.
“For such operators, an unexpected loss without adequate insurance protection could threaten not only the affected company but also jobs, passenger connectivity and investor confidence,’’ he said.
More so, Capt. John Ojikutu, Chief Executive Officer of Centurion Security and Safety, told NAN that one of the major issues confronting aviation stakeholders was the cost of insurance.
According to him, aviation insurance is generally more complex and expensive than conventional insurance because of the high value of aircraft and the potentially enormous liabilities associated with aviation accidents.
“Nigeria’s dependence on international reinsurance markets also means that developments in the global insurance market can influence the cost and availability of aviation insurance locally.’’
He explained that aviation insurance was what the government seemed to have (deliberately) paid less attention to in the Civil Aviation Act of 2022 and the Economic Regulations of the Nig CARs especially on the airport as it did on airline insurance.
Ojikutu said the 2006 Act and the economic regulations had definite insurance values for international airports and domestic airports so also it had premium insurance values for various sizes of aircraft.
According to him, while there are premium values in the 2022 Act/Regulations for the airline’s aircraft, no such values exist for Nigerian airports.
“This is one major reason why the foreign airlines fares are higher from Nigeria on intercontinental routes to anywhere outside the continent than from any other country in the continent especially to Europe, U.S., far-East and Asia.
“The NCAA in particular and the Airlines should ask the National Assembly and the responsible ministry why the insurance law does not include the government aviation services agencies.
“Such measures will be taken in the event something goes wrong while providing services to their airline in operation or when parked at their service apron,” he said.
He noted that domestic airlines suffered short lifespans because they alone must absorb premium costs during accidents or incidents that were not their fault, all while competing against foreign airlines with higher fares.
According to him, such laws if not looked into, put the burden of passengers’ rights to insurance wholly on the airlines.
“There have been many examples of government services agencies involving in aircraft accident and serious incident that the insurance payments were not done.
“One that involved Cargolux, a foreign airline that crashed on runway 18R caused the NCAA, not Nigerian Airspace Management Agency (NAMA), 6 million dollars in court payment for damages,’’ he said.
Meanwhile, Mr Obafemi Bajomo, Senior Special Adviser on Foreign Direct Investments to the Minister of Aviation and Aerospace Development, said that the Federal Government had been intensifying efforts towards the development of Nigeria’s capacity to underwrite aviation risks.
According to him, while Nigerian insurance companies participate in the aviation insurance market, complex and high-value aviation risks often require substantial reinsurance support.
Bajomo said the government had been strengthening local underwriting capacity, improving technical expertise and developing specialised aviation insurance products to enable more risks to be retained within the Nigerian economy.
He said that the aim was to potentially reduce the amount of premium income that left the country while creating opportunities for the growth of the domestic insurance industry.
According to him, the government is, however, aware that increasing local retention must be accompanied by strong risk-management practices, adequate capitalisation, professional expertise, and access to reliable international reinsurance capacity.
Bajomo said Mr Festus Keyamo, the Minister of Aviation and Aerospace Development, had sought to address one of the major obstacles facing Nigerian airlines: the high cost and limited capacity of aviation insurance, particularly for aircraft acquired through dry leasing.
“In May 2025, Keyamo unveiled a new regulatory framework intended to make insurance arrangements for leased aircraft more workable and support aircraft financing.
“The revised framework allows Nigerian operators, under specified conditions, to cede up to 90 per cent of aviation insurance risk to international markets, helping address the capacity limitations of domestic insurers.
“Keyamo had previously highlighted concerns from international aircraft lessors that Nigeria’s local insurance market lacked sufficient capacity to handle the risks associated with dry-leased aircraft,’’ Bajomo said.
Similarly, the Nigeria Civil Aviation Authority (NCAA) and the National Insurance Commission (NAICOM) recently signed a landmark Memorandum of Understanding (MoU) on cooperation and collaboration in the regulation and oversight of aviation insurance in Nigeria.
The MoU was signed in Abuja by the Director-General, Civil Aviation, Capt. Chris Najomo, and the NAICOM Commissioner, Mr Olusegun Omosehin.
Speaking at the ceremony, Najomo said the historic event was the culmination of a long-standing collaborative relationship between the two regulatory institutions.
He added that it reinforced a shared commitment to strengthening aviation safety, financial resilience, regulatory compliance, and the protection of the travelling public.
Najomo noted that aviation remained a paradoxical industry that was globally recognised as the safest mode of transportation, yet characterised by high-impact operational risks.
“As the Authority statutorily responsible for regulating and mitigating these risks at the State level, our safety mandate must be complemented by a robust, transparent, and verifiable insurance framework.
“This partnership with NAICOM strengthens that foundation and reinforces the operational safety and financial resilience of the Nigerian aviation sector.
“For several years, NCAA and NAICOM have worked closely, with NAICOM providing expert assessments on the adequacy and viability of insurance policies procured by aviation operators in compliance with Part 18.14 of the Nigeria Civil Aviation Regulations 2023” he said.’’
In his remarks, Omosehin said the occasion would strengthen institutional cooperation and be a shared regulatory commitment to the safety, integrity, and resilience of the Nigerian aviation ecosystem.
He said the effective insurance protection was a regulatory requirement given the nature of aviation operation, and essential risk management tool that safeguarded the lives of travelers, the property, and the businesses within the broader economy.
“It is imperative that regulators work together to ensure that insurance agreements supporting the aviation sector remain adequate, remain valid, and responsive to emerging risks.
“In the event of a serious accident in aviation, the level of protection that has been provided for people is resilient enough to put smiles on the faces of families of those who are affected, and businesses or entities that are also impacted,’’ he said.
To build a safer, more competitive, and economically productive aviation industry, stakeholders say the nation must prioritise proper insurance coverage for the sector.(NANFeatures)
Edited by Chijioke Okoronkwo
***If used, please credit the writer and the News Agency of Nigeria.