Airport Blaze Exposes Risk: Majority of Airports Lack Coverage, Say Aviation and Insurance Specialists

In the wake of the recent fire incident at the Murtala Muhammed International Airport, experts in the aviation and insurance sectors are urging the federal and state governments to ensure that all airports in the country have adequate insurance coverage, as many currently do not.

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Notably, Nigeria has a total of 32 airports, with 26 of them being operated by the Federal Airports Authority of Nigeria, although the agency has stated that it manages 22 airports, according to Wikipedia.

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The absence of comprehensive insurance coverage for these airports poses a significant risk to the government, which could face substantial financial losses and compensation claims in the event of a major disaster, experts have warned.

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This warning comes after a fire at the Murtala Muhammed International Airport's Old Terminal resulted in the complete destruction of the meteorological and air-to-ground communication equipment.

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Aviation analyst Grp Capt John Ojikutu has pointed out that statutory regulatory requirements should mandate airports to have comprehensive insurance cover, but this is not currently the case in Nigeria.

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According to Ojikutu, earlier provisions of the Nigerian Civil Aviation Regulations required international airports to maintain insurance coverage of around $250 million, while domestic airports were expected to carry coverage of approximately $100 million.

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Ojikutu has challenged the Federal Airports Authority of Nigeria to clarify the insurance status of the airports it manages, stating that the regulations that came out in 2012 and were reviewed in 2022 made provision for international airports to be insured for $250 million, but this provision is no longer included.

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Ojikutu holds the Nigerian Civil Aviation Authority responsible for the lack of insurance coverage, saying that if FAAN does not have insurance, those who lost equipment in the fire should be able to sue them.

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Insurance practitioner Aluor Stephen has noted that insuring an airport is not difficult in other countries, but the government has not shown the will to do so in Nigeria, which could result in significant economic losses in the event of a major disaster.

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Stephen warned that an uninsured airport could lead to huge economic losses for the government and individuals who benefit directly or indirectly from the facility, as the cost of rebuilding infrastructure would be substantial.

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Stephen emphasized that airport equipment, such as navigation equipment and control towers, can be insured under normal fire and machinery breakdown policies, just like equipment in other industries.

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Associate Professor of Insurance at the Lagos State University, Dr Olufemi Abbas, has stated that the implications of not insuring an airport could be catastrophic, with significant financial losses, loss of revenue, and potential third-party claims.

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Abbas explained that insuring an airport involves assessing the value of the facility and identifying the various risks it is exposed to, such as fire, burglary, and theft, and placing them under appropriate insurance cover through a process called underwriting.

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Abbas noted that the premium paid by the insured is relatively small compared to the risk when it occurs, and that the impact of an uninsured airport would be felt by businesses and individuals who use the facility.

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Efforts to contact the Director of Public Affairs and Consumer Protection of FAAN, Mr Henry Agbebire, to clarify the insurance status of FAAN-managed airports were unsuccessful, as he did not respond to calls or messages.