Nigeria Revamps Insurance Regulation for Leased and Financed Aircraft to Boost Aviation Sector
By Patience Ikpeme
Nigeria has revised its Regulation on Insurance for Leased and Financed Aircrafts. This development is expected to reposition the industry by fostering growth and boosting investor confidence.
The disclosure was made during a ceremony held at the Office of the Minister of Aviation and Aerospace Development in Abuja on Monday by Mr. Olusegun Ayo Omosehin, the Commissioner for Insurance who described the new regulation as a transformative framework designed to introduce clarity, confidence, and resilience to Nigeria’s aviation insurance market.
Mr. Omosehin explained that the updated regulatory guide was developed following an extensive consultative process that involved a wide range of stakeholders, including domestic and international aviation operators, insurance firms, lessors, and financiers.
He noted that the revised framework aligns with international best practices and aims to liberalize Nigeria’s insurance requirements for aircraft leases and financing.
By addressing long-standing concerns of foreign investors and aviation financiers, the regulation is anticipated to reduce barriers to entry and enhance competitiveness in the local market. “The new regulation provides clarity and stability for insurers and aviation operators, ensuring that insurance arrangements on leased or financed aircraft are in harmony with global expectations. This, in turn, allows Nigeria to attract more financing options and leasing arrangements while bolstering the local insurance market,” he stated.
The Commissioner credited the Federal Ministry of Aviation and Aerospace Development, led by Mr. Festus Keyamo, SAN, for creating a critical platform for the reform. He also acknowledged the support from the Presidential Enabling Business Environment Council (PEBEC), which has played a vital role in improving Nigeria’s investment climate and expediting the process.
According to Mr. Omosehin, the regulation will serve as a strong foundation for enhancing transparency in aircraft leasing contracts and insurance placements. It is designed to foster collaboration between aviation service providers and underwriters, reduce operational risks, and build confidence in cross-border financial engagements involving Nigerian-based aviation assets.
Stakeholders who contributed to the development of the revised regulation include the Nigerian Insurers Association (NIA), Airline Operators of Nigeria (AON), and various domestic and international financiers and technical partners. Their input ensured that the new rules are pragmatic, commercially viable, and consistent with the realities of a dynamic global aviation market.
During the launch, Mr. Omosehin discussed the potential of the aviation sector to significantly contribute to Nigeria’s GDP if supported by appropriate policies. He acknowledged the challenges the sector faces, such as foreign exchange scarcity and infrastructure deficits, but expressed optimism that an enabling insurance environment would improve resilience, attract investments, and strengthen compliance with international leasing and financing obligations.
“With the right insurance framework, Nigeria’s aviation sector can overcome challenges, adapt to changes, and thrive in an ever-evolving landscape,” he remarked.
The revised regulation comes at a crucial time as Nigeria seeks to expand its civil aviation footprint, modernize airport infrastructure, and facilitate the entry of new airline operators into the market. With a comprehensive insurance regulation now in place, it is believed that the cost of leasing and financing aircraft in Nigeria will decrease, providing airline operators with improved access to fleets and lowering operating costs over time.
Additionally, the regulation allows for a variety of insurance placements that can be conducted through locally licensed insurers or international reinsurers, depending on the scope of the leasing contract, the aircraft’s origin, and the financing arrangements. This approach aims to balance the need for local content with the demands of global capital providers, who often prefer internationally rated insurers and reinsurers.
In his address, Minister of Aviation and Aerospace Development, Festus Keyamo (SAN), stated that, “Since we came to office, we have done our best to evolve policies that will make the entire aviation ecosystem in Nigeria more investor-friendly and conducive for our local operators. Our focus is to empower our local operators to ensure that the ease of doing business is significantly enhanced in Nigeria, especially given the conditions under which they operate.”
He added that, “The world is happy with that, and right now we are achieving the highest score in Africa in terms of compliance with the Cape Town Convention. We have also refined our Irrevocable Deregistration and Export Request Authorisation (IDERA) to meet global standards. Today, our IDERA is among the best in Africa.”
Speaking on the revised regulation, the minister noted the challenges surrounding insurance for dry leased aircraft in Nigeria. He acknowledged that the global expectation is to place the risk in international markets due to concerns about the capacity of local markets. This realization prompted extensive international engagement.
“We conducted a lot of international shuttle diplomacy together with the Commissioner for Insurance and other stakeholders in Nigeria. We engaged numerous international stakeholders on this matter,” Keyamo stated.
