Crashed Dana aircraft not properly insured – Investigation
June 19, 2012 by Nike Popoola 52 Comments
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Indications have emerged that the Dana Air plane that crashed in Iju-Ishaga area of Lagos on June 3 and caused the death of all 153 passengers and crew members on board and 10 people on the ground, may not have been properly insured.

One of the underwriters of the crashed aircraft, who disclosed this to our correspondent in confidence on Monday, said the lead insurer, Prestige Assurance Plc, did not pay the premium due to the local underwriters before the aircraft crashed, but only settled the foreign reinsurer.

It was also learnt that many of the aircraft in the country were not properly insured, thus leaving the passengers who board them and third party individuals and organisations that might be exposed to them unprotected.

Prestige Assurance, a firm largely owned by Indians, led six other local insurance companies to insure 30 per cent of the aircraft’s risk locally, while the remaining 70 per cent was reinsured with AON Reinsurer of London.

The source, who would not want to be named because of his involvement in the controversial insurance cover, said that the National Insurance Commission was not taking the issue lightly with the companies involved.

It was gathered that two days after the crash, NAICOM summoned the seven local insurance companies to an emergency meeting to discuss their plans on how and when to pay claims to the families of the victims.

At the meeting, the co-insurers reportedly told the commission that they would back out of the business because six months after the commencement of the contract, the lead underwriter had not paid them any premium.

According to them, the insurance law states that if there is no payment for that kind of policy after 90 days of commencement of the business, the principle of ‘no premium, no cover’ will hold.

Our correspondent gathered that NAICOM, however, demanded to know from the companies if they wrote officially to the client to cancel their contract because the law also required that the client should be alerted officially after 90 days.

However, the insurance companies were said not to have complied with that aspect of the law.

Based on this, it was further gathered that NAICOM accused the underwriters of unethical and unprofessional practices with regards to the policy because they did not anticipate the possibility of a loss occurring.

The commission, after reminding the underwriters that it would not tolerate claims default, ordered them to pay the claims promptly or face stiff penalties.

During a second meeting with the commission in Abuja on Thursday, the underwriters had expressed their readiness to pay the claims from their reserves, and that Dana Air and Prestige Assurance were already making efforts to make funds available for the initial N4.6m settlement for the family of each victim of the crash.

More than two weeks after the crash, Prestige Assurance and the foreign reinsurer have not made any official statement on their involvement in the policy.

When contacted, the Commissioner for Insurance, Mr. Fola Daniel, said reinsurance treaty was put in place for the aircraft and NAICOM would ensure that claims would be settled promptly.

However, a senior official confirmed that the companies acted unprofessionally by not insisting that the policy should be properly executed.

The source said NAICOM would ensure that the insurance companies involved would be made to pay the accruable claims or risk serious sanctions, including possible suspension of their operating licences.

http://www.punchng.com/news/crashed-dana-aircraft-not-properly-insured-investigation/