Air Crash: NCAA Tinkers New Compensation Plan
A family of aviation crash victim may be paid as much as $300,000 instead of the current $100,000 if the plan by the Nigerian Civil Aviation Authority (NCAA) to introduce a new funding and insurance programme kicks off soon. But insurance companies and aviation experts are kicking against the new move on the grounds that it will be too tasking for air travellers who are already reeling over an exorbitant air bill. They also argue that the aviation authority is intruding into the roles of the insurance industry.
To be known as No-Fault Insurance Scheme, it will be fully administered by the NCAA while the Central Bank of Nigeria (CBN) is to be the major underwriter. The policy allows prospective travellers to accumulate or buy more insurance from the agency at any point he is about to board an airline. This is an additional insurance to the normal insurance cover each traveller has.
Speaking to BusinessWorld over the weekend, Mr. Sunday Thomas, director general, Nigerian Insurers Association (NIA), said the major business of NCAA should be about infrastructure development to ensure that aircraft flying the Nigerian airspace are in good condition, thus, safeguarding the lives of travellers.
Thomas said such insurance package should be left for aviation insurers to decide whether to introduce such a product or not. According to him, NCAA, as a government agency, might find it difficult to manage such a scheme, especially, when it does not fall under its jurisprudence. “I think it might fail like most previous government projects,” he said. “Infrastructural development should be the business of NCAA. They should ensure that aircraft are in good condition and not about managing fund. As it is, every traveller has an insurance cover and now, they are talking of additional cover. So, I don't know anywhere in the world where something of such is in operation.”
Thomas, however, said the association is already discussing with the appropriate quarters on the new development, adding that airline operators are unhappy about it. "We are already discussing it with appropriate quarters to resolve all issues around it," he said.
In the same vein, Mr. Ekanem Ekanem, chairman, Air Transport Senior Staff Services Association of Nigeria (ATSSSAN), said because Nigeria is a developing economy, air travellers may see it as an additional cost that they may not want to bear.
Ekanem said only few people patronise air travel currently, and that a development like this might further lead to exit of more air travellers from the aviation industry.
“I quite agree that the new scheme will improve payment of compensation to victims' families, but the fact remains that how much will it then cost an average Nigerian to travel by air?” he asked.
He added that “it will compound the cost and thereby making air travel not a viable option. Introducing this scheme therefore will reduce the number of people travelling by air.”
On the other hand, Captain David Olubadewo, managing director, Airline Management Support Limited (AMS) said NCAA should not bother itself with insurance but concentrate on regulatory matters. “I believe that such matters should be left for insurance companies of the airlines to decide,” he said.
Meanwhile, it was gathered that when this new insurance kicks-off, it can be bought at a cheap price, at the point of travelling by interested travellers.
Dr. Harold Demuren, director general of NCAA, said the motive was to reduce the hardship encountered by families of air crash victims and enable them earn more than the statutory $100,000 compensation. Demure said the planned scheme was already on in Europe and the United States, describing it as the best way to go.
He disclosed that the accruable funds would be managed separately by the Central Bank of Nigeria (CBN), explaining that though money would not buy back lives, he believes that the $100,000 compensation was very meagre.
With the new scheme, there are indications that in the event of an accident, victim's family could be paid as much as $300, 000, depending on the consistency of the deceased in raking up more premiums.