Ghana Oil and Gas Insurance Pool, (GOGIP) says it is looking at collecting gross premiums of $50 million through petroleum assets underwriting.
According to the GOGIP, the amount is bound to increase further as activities in the sector are expected to surge following the landmark ruling by the ITLOS in favour of Ghana.
In an interview with JoyBusiness at a 3-day Energy Insurance Training, Head of Technical at GOGIP, Kwabena Larbi says the pool is leveraging latest improvements in the oil and gas sector to mop up the said amount as total premiums.
He said, “In the last few years we’ve done our bit, we started with one FPSO, now we have three FPSOs, it’s going to grow; we are looking at around 50 million dollars in gross premium; we are hoping that in the next few years this can also grow.”
“Bear in mind that with the 50 million, not all the companies are insuring; we have some of the companies which are still using global insurance companies.
So when we get to the point where compliance issues come in; the Petroleum Commission and the National Insurance Commission set up this joint task force that they intend to set up, we are going to increase the premium that are going to be retained in the country and there will be additional revenue coming in.” Mr Larbi added.
Meanwhile, the Petroleum Commission is to collaborate with the National Insurance Commission to set up a taskforce to promote local content participation in oil and gas insurance.
According to the Petroleum Commission, this has become necessary as companies in the country keep buying insurance products (especially Oil and Gas) from foreign countries. This results in premium flight, that is, revenue leaving the country.
Deputy Chief Executive of Petroleum Commission, Prince Benjamin Aboagye, says his outfit would collaborate with the NIC to set up a taskforce to promote local content participation, as well as prevent capital flight.
“As regulators in the upstream sector, we are committed to promoting and enforcing the local content regulation. By this, we will support the pool by enforcing compliance with the protocols for oil and gas insurance placement,” he said.
“In collaboration with the NIC, we shall set up a joint task force that will enforce strict compliance with aspects of the insurance Act 206, Act 724 and local content regulation LI 2204 by the operators.” Mr Aboagye added.
The Commissioner of Insurance, Justice Yaw Ofori, has cautioned companies in the oil and gas sector against insuring local businesses outside the country.
According to him, there are several contractors and subcontractors operating in the country who procure cover from overseas insurers for properties domiciled in the country and for the liabilities arising out of their operations. A situation, Mr Ofori says, is contrary to the insurance law.
On his part, Specialist in upstream and offshore energy insurance, David sharp, says the industry needs to do more to underwrite big-ticket risks.
“I think that the Ghana insurance market needs to support the energy industry and you need to extract as much as possible out of Oil and Gas and part of that is the service industry, and the service industry obviously includes insurance so it goes hand-in-hand,” he said.
According to Mr Sharp, the country’s oil and gas insurance has great potentials in terms of revenue generation.
He said, “I see that there is a rosy future in the insurance industry here supporting the Oil industry in Ghana.”
The Ghana Oil and Gas Insurance Pool (GOGIP) is a consortium of insurance companies put together by the Ghana Insurers Association (GIA) to pull their resources together to be able to underwrite oil and gas risks in the upstream sector.
Individual Local insurance companies have not been able to single-handedly underwrite risks in Ghana’s petroleum sector since its inception. This is because of the enormous nature of such risks. As a result, the NIC came up with the GOGIP to help local insurance companies take part in the upstream sector insurance.