Energy, Oil & Gas Insurance

Oil and gas insurance is a specialist area of cover because of the potentially hazardous nature of the work and the remote regions involved – both onshore and offshore. Production can also be situated in war or terrorist areas and executives can be vulnerable to kidnap and ransom demands.

We provide insurance cover to investors and contractors in the following fields of oil, gas and energy businesses:

  • Exploration and Production
  • Midstream and Downstream
  • Power Generation and Renewable Energy
  • Power Generation and Distribution (GENCOs and DISCOs)

Using a mixture of international insurers and underwriting facilities, we negotiate competitive insurance for oil and gas companies, suppliers, contractors and individual workers. 

Power Generation and Distribution companies are engaged in the business of generation and bulk purchase of electricity, and its sale to customers. Power Distribution is a capital intensive business which is based around the distribution of electricity from the transmission system to the customer’s premises.

The transition of GENCOs and DISCOs ownership from public to private ownership can create significant risks and insurance issues. With the strength of public ownership, the majority of risks can be absorbed at national level. However, private sector ownership, particularly with project finance style ‘debt financing’ requires a very different approach to risk transfer which insulates the owner and lender from significant exposure.

Many of the typical risks faced by GENCOs and DISCOs are not compatible with the preferences and appetite of insurers in the sector. For example, overhead transmission lines are a standard exclusion under the treaty reinsurance protection, so the ability of the insurance market to provide meaningful capacity is greatly restricted.

Other distribution assets likely to be part of the privatized DISCOs include the following:

  • buried cables
  • low voltage open or pole mounted transformers
  • Open air sub stations
  • Switchgear Meters

Key issues

  • Insurers will want a detailed asset register which includes replacement cost values. Typically, state owned GENCOs and DISCOs will only record ‘book values’ and may not have accurate details of their assets. This causes a problem for insurers where the client is looking for replacement value insurance limits.
  • Because of state ownership, it is likely that there will have been little, if any commercial insurance placed for the power generation and distribution companies’ assets, revenues or liabilities. Consequently it is unlikely that there will be any existing property/engineering surveys of the assets which are a key measure of exposure the private sector insurers will be looking for. We would hope to be able initiate surveys with the client for insurance purposes if successful.
  • Claims record. In the absence of an existing insurance programme, it is unlikely that a verifiable claims record exists. Loss or damage would likely have been dealt with under the operational expenditure or maintenance regimes rather than reported or dealt with as an insurance claim. This means that a track record for losses may not be available.
  • Liability Exposure. The general liability exposure is significant and unlikely to have been insured under state ownership. Therefore, a reliable record of loss events and their cost may not be available. GENCOs and DISCOs have a wide range of liability exposures resulting from the basic dangers of distributing electricity. Sub stations, power lines and transformers are all potential trespass and theft risks which could result in personal injury from electrocution. There is also the perceived risk of Electro Magnetic Fields causing personal injury or disease which is a typical exclusion for general liability policies.
  • Risk Management Protocols. Although there may be a strong culture of risk management protocols in state owned distribution businesses, this may not be focussed on ‘insurable risk’ and its mitigation. Shifting the culture in the privatised entity towards asset protection, business continuity and the mitigation of liabilities will likely require financial and resource investment.

SENFORCE INSURANCE BROKERS IS THE FIRST AND ONLY INSURANCE BROKING COMPANY THAT HAS COMPREHENSIVE INSURANCE PACKAGE TO COVER ALL THE RISKS OF POWER GENERATION AND DISTRIBUTION COMPANIES IN NIGERIA WORKING WITH EXPERIENCED INTERNATIONAL INSURERS IN THE FIELD.

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Claims and loss handling is the materialized utility of insurance, it is the actual "product" paid for. As your brokers/risk management consultants, it is our duty to work with you through the claims process to ensure that claims processing is hassle free to your organisation. We have done it for others and now is the time for you to share from this experience!

At Senforce, our role in the claims management process is as follows:

    • To monitor, manage, regularly follow up and negotiate settlement of all claims submitted by clients.
    • To assist in the resolution or conduct of difficult or contentious claims with underwriters and re-insurers where required.
    • Claims administration, including collection of insurance proceeds and proactive follow-up of outstanding claims until finalization.
    • Provision of status reports on all claims in process for clients.
    • To maintain records of paid and outstanding claims for underwriting disclosure and inclusion in renewal submissions.

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