Federal Government Launches New Insurance Framework for Leased Aircraft

Federal Government Launches New Insurance Framework for Leased Aircraft

To enhance the ease of doing business in Nigeria’s civil aviation sector, the Federal Ministry of Aviation and Aerospace Development has unveiled a new insurance regulation framework for Dry Lease Aircraft under the National Insurance Commission’s (NAICOM) policy to boost the sector.

The Federal Government has unveiled a new insurance regulation framework for leased aircraft, designed to create a more business-friendly environment for airline operators in Nigeria.

According to a statement signed by Odutayo Oluseyi, Head, Press and Public Affairs at the Ministry of Aviation and Aerospace Development, the initiative, unveiled by Festus Keyamo, Minister of Aviation and Aerospace Development, underscored administration’s commitment to improving investor confidence, reducing operational costs, and aligning with International Aviation Standards under the Cape Town Convention.

Festus Keyamo introduced the initiative during an official ceremony at his office in Abuja. “We are proud of the progress made in enhancing the aviation ecosystem in Nigeria,” Keyamo stated. “Our focus is on investor-friendliness, empowering local operators, ensuring compliance with international standards, and driving growth and development in the aviation industry.”

According to Keyamo, the Federal Government is working extensively to ensure airline operators benefit from friendly insurance policies that facilitate easier business operations. The revised regulations are expected to boost the aviation sector, improve Irrevocable Deregistration and Export Request Authorisation (IDERA), and allow local operators to cede up to 90% of risk to international markets under certain conditions, aligning with the Cape Town Convention’s provisions for aircraft acquisition and financing.

The Minister acknowledged the National Insurance Commission (NAICOM) for their diligent work in bringing the policy to fruition.

Chris Najomo, Director General of the Nigeria Civil Aviation Authority (NCAA), represented by Olayinka Babaoye, Director of Air Transport Regulation, expressed NCAA’s enthusiasm for the development and pledged the authority’s full support for the policy.

Olusegun Ayo Omosehin, Commissioner for Insurance and CEO of NAICOM, affirmed that the Commission had committed not only to pilot the process but also to take ownership of it.

The Nigerian aviation industry faces several challenges, which Minister of Aviation and Aerospace Development, Festus Keyamo, has acknowledged and is actively working to address. Some of the key issues include high operational costs, limited access to aircraft leasing, infrastructure deficits, and regulatory bottlenecks.

One of the major concerns is the burden of aviation insurance, which has historically made it difficult for airline operators to secure financing and leasing agreements. To tackle this, the government has introduced a revised insurance regulation that allows local operators to cede up to 90% of their insurance risk to international markets, aligning with global best practices under the Cape Town Convention. This move is expected to boost investor confidence, reduce financial strain on airlines, and facilitate fleet expansion.

Additionally, Keyamo has emphasized the need for modernizing aviation infrastructure, including airport facilities and air traffic management systems. The government is working on enhancing safety measures, streamlining regulatory processes, and creating a more business-friendly environment for airline operators.

The pathway forward involves strengthening collaboration between aviation stakeholders, insurers, and financial institutions to ensure sustainable growth in the sector. Keyamo has also highlighted the importance of local content policies, which aim to empower Nigerian operators while maintaining compliance with international standards.

Overall, these reforms signal a new era for Nigeria’s aviation industry, positioning it for greater competitiveness, increased investment, and long-term stability.

The future of aviation financing and insurance is evolving rapidly, driven by technological advancements, regulatory changes, and shifting market dynamics. Insurers and financiers are increasingly leveraging artificial intelligence and big data analytics to assess risks, optimize underwriting, and streamline claims processing, while predictive analytics is being used to forecast maintenance needs and reduce operational disruptions, improving aircraft financing models.

With the global push for carbon neutrality, aviation financing is shifting towards sustainable aviation fuels, electric aircraft, and hydrogen-powered planes. Green financing initiatives, including environmental, social, and governance investments, are becoming more prominent, encouraging airlines to adopt eco-friendly technologies.

Airlines are moving towards power-by-the-hour leasing, where they pay for aircraft usage rather than ownership, reducing financial burdens. Blockchain-based smart contracts are emerging to enhance transparency and efficiency in aircraft leasing agreements.

The aviation insurance market is adapting to new risks, including cybersecurity threats, geopolitical instability, and supply chain disruptions. Insurers are developing customized policies to address challenges posed by next-generation aircraft materials and autonomous flight technologies.

Governments and international bodies are refining aviation insurance regulations to align with global standards, such as the Cape Town Convention. The industry is witnessing increased collaboration between aviation authorities, insurers, and financial institutions to create more investor-friendly policies.

The emergence of electric vertical takeoff and landing aircraft is prompting insurers to develop new coverage models for urban air mobility. As cities explore air taxis and drone logistics, aviation financing is expanding to support these innovative transportation solutions. These trends indicate a dynamic shift in aviation financing and insurance, paving the way for a more sustainable, efficient, and technologically advanced industry.