Insurers eye lucrative Oil & Gas Sector to grow Insurance penetration

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Insurers involved in Oil & Gas projects under their umbrella body the Insurance Consortium for Oil and Gas Uganda (ICOGU) have revealed that so far, they have underwritten premiums worth $13m from the Oil and Gas Sector.

According to James Maguru, ICOGU Consortium Leader, this is a good return on investment given that it’s a new sector they are venturing into with prospects of growing insurance penetration shortly.

“This is part of our National Local Content Commitment and the premiums underwritten so far are testament to the fact that the Oil and Gas Sector has the potential to grow the insurance industry. The re-payment is made in phases and this is why we have received USD13m. ICOGU is optimistic that the remaining balance will be cleared,” Maguru noted.

The insurance companies are currently offering covers for Contractors All Risks Policy, Excess Third-Party Liability Policy and Operators’ Extra Expenses of up to a tune of USD 12.8m for Tilenga, East African Crude Oil Pipeline (EACOP) development USD 2.3m and Kingfisher area development USD 5m.

According to Ronald Musoke the Chief Executive Officer of Uganda Reinsurance Company, the consortium was given a limit on what they can insure by the regulator IRA.

“The consortium has the potential to offer more covers, but because it is a new field for us, we have limits set by the regulator. We are however optimistic that once we acquire the expertise required then the limit will be widened,” Musoke noted.

Meanwhile, ICOGU Technical Committee Chairman, Paul Kavuma reckons that the symposium will devise ways of building expertise required for the Oil and Gas Sector.

“Being the first of its kind in the insurance industry, we still have several areas to fine-tune based not just on the current state of Uganda’s Oil & Gas sector, but also developments from other evolved markets that we seek to learn from & benchmark on.”

Jonan Kisakye CEO Uganda Insurers Association said some of the major areas of discussion will include: Underwriting oil and gas risks, Contractors All Risks, Reinsurance for oil and gas risks, Claims and Loss Adjusting, liabilities & business interruption.

“The Oil & Gas sector is synonymous with massive operations that come with potential risks of great magnitude. The risks exist at all points in the Oil & Gas ecosystem right from exploration, drilling, and refining to transportation.This makes insurance a key requirement of sustainability & uninterrupted continuity through minimizing losses resulting from accidents & natural disasters.”