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NCAA to enforce regulations on insurance, to ground defaulting carriers, service providers

The Nigeria Civil Aviation Authority (NCAA) is worried about the lack of adequate insurance cover for aircraft and other service providers.

As a result, the agency has concluded plans to enforce regulations on insurance, to ground defaulting carriers, service providers

The Nigeria Civil Aviation Authority (NCAA) has demanded compliance with Nigerian Civil Aviation Regulations (Nig. CARs) 2022 on insurance cover to be maintained by all allied aviation services providers.

This directive is contained in an all-operator letter with reference NCAA/DG/AIR/11/16/369 dated August 11, 2023, addressed to all airlines and allied aviation services providers and personally signed by the Director General of NCAA, Captain Musa Nuhu.

The compliance is sequel to the coming into force of Nig. CARs 2022 on July 10th, 2023 which makes it mandatory that all airlines comply with Part of the Regulations.

Specifically, Part of the Regulations provides amongst others that all airlines and other allied aviation service providers must not operate without adequate and valid insurance cover; submitting to the authority copies of valid insurance certificates, evidence of payment of premium and other policy documents of insurance cover of not less than three months as specified in IS: and having insurance document which must be adequate and renewed before the expiration of the current policy and be submitted to the NCAA as soon as it is renewed.

The authority noted that NCAA wants to state that non-adherence to this regulation will attract immediate sanctions which will include the grounding of the specific aircraft and taking enforcement action against any airlines or service providers that defaulted.

He urged them to be guided accordingly to prevent the grounding of their operations.

It would be recalled that despite Nigeria’s low air crashes or serious incidents, insurance firms, particularly those based overseas, still charge the country’s airline operators high insurance premiums, a situation that was attributed to the bad rating of the continent’s airlines in terms of safety.

Many of the insurance brokers who spoke to Aviation Metric admitted that premium rates were usually raised any time there is a plane crash, stressing that though aviation risks are low, they are high in severity and require a strict legal framework and regulatory principles that operate in the insurance sector.

Consequently, many of the country’s operators were finding it extremely difficult to pay their premiums on their assets like aircraft and others, disclosing that many carriers are breaking it into bits, monthly, some quarterly, and other pieces.

According to one of them who spoke under condition of anonymity said, “Our law says no premium no cover and if you don’t pay, you are on your own. You can’t fly if you don’t have insurance. This is an issue. Even accessing foreign exchange to pay your insurance overseas is some of the challenges in the sector. The insurance company won’t collect Naira from you.”

““It is not optional for you not to have insurance as an airline operator. If you don’t insure your liabilities for example you cannot fly. We liaise with the Nigerian Civil Aviation Authority (NCAA) to ensure that whatever paper is submitted to them at NCAA is evidence that you have insurance so that they can allow you to fly.”

The country had, in the recent past, experienced ugly experiences where reinsurance firms in the country had had to distance themselves from airlines any time there are issues of claims, especially during air crashes. The reasons according to experts who spoke at the forum were attributed to piecemeal payment of premium.

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