NCAA urges aviation insurers to align with global best practices

The Director General of the Nigeria Civil Aviation Authority (NCAA), Captain Chris Najomo, has called on insurers covering aviation risks to strengthen compliance, build resilience, and align with global best practices.

He spoke at the Civil Aviation Insurance Compliance and Financing Summit held recently in Lagos.

Speaking on the summit’s theme, “Securing the Skies: Navigating Aviation Insurance and Aircraft Finance Safeguards,” Captain Najomo outlined several key challenges.

These include developing practical approaches for retaining essential components of existing insurance contracts while transitioning to new frameworks, clarifying global expectations and best practices, ensuring technical compliance without breaching lease or loan covenants, harmonizing safety oversight with financial indemnity obligations, and providing operational guidance for reinsurance arrangements involving foreign insurers under the newly issued addendum.

In his keynote address, the Minister of Aviation and Aerospace Development, Festus Keyamo, SAN, stressed that airlines must demonstrate full compliance and transparency in their insurance programs.

He urged insurers to provide adequate capacity, competitive products, and internationally benchmarked risk management. He added that aircraft lessors and financiers must have confidence in Nigeria as a stable investment environment, while regulators must ensure alignment, coordination, and proactive communication.

Participants at the summit also addressed a long-standing dilemma: airlines are expected to comply with Nigeria’s local content policy by insuring with local firms, yet aircraft lessors insist on coverage from international insurers such as Lloyd’s of London.

Delivering a presentation on the Addendum to Prudential Guidelines for Insurers and Reinsurers, Director of Inspectorate at the National Insurance Commission (NAICOM), Bankole Ajibola, highlighted issues affecting aircraft insurance.

These include a maximum retention limit of 5% of shareholders’ funds per aviation risk, mandatory senior-level authorization for all aviation placements, adherence to global standards and financial strength ratings, local content compliance, and a 72-hour occurrence-based reporting requirement.

The Chief Operating Officer of United Nigeria Airlines, Mazi Osita Okonkwo, lamented the lack of capacity within the Nigerian insurance market to structure and underwrite high-risk aviation policies, particularly for large-body aircraft.

He warned that this limitation hinders the industry’s growth. Okonkwo urged for market liberalization to foster competition, strengthen stakeholder confidence, and support the federal government’s broader reform agenda.

He noted that similar reforms in the banking sector helped create globally competitive institutions—an outcome he believes the insurance industry also needs.

Summit participants agreed that aircraft safety is determined by maintenance standards rather than age, and called on regulators and the Ministry of Aviation to review the current 22-year age limit for aircraft used in commercial operations.

They also recommended that the NCAA prequalify insurance companies permitted to serve the aviation sector based on demonstrated capacity.

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