Petroliam Nasional Bhd (Petronas) generic photo. Petronas flag blowing in the wind next to the Malaysian and Federal Territories flags at a Petronas station in Kuala Lumpur, seen in July 2015. (Pic taken by Hafidz Mahpar for Star Online.)
KUALA LUMPUR: The setting up of Energas Insurance (L) Ltd, the sole captive insurer of Petroliam Nasional Bhd (Petronas), has enabled the national oil and gas giant to tap the sanctioned countries such as Sudan, Cuba and Myanmar (where the sanctions are suspended, not lifted).
Energas chief executive officer, Raziyah Yahya, said as a captive, the company was able to write risks in the sanctioned nations that were not covered by the traditional conventional insurers backed by the US.
“It is easier for the group to tap those sanctioned countries because we know that if there is a need for insurance, the captive will be there to provide the insurance coverage that are unable to be provided by the traditional insurers due to the sanctions,” she said.
She was speaking to Bernama on the sidelines of the one-and-a-half-day Asian Captive Conference 2017 which ended on Thursday.
Raziyah said under the US Treasury’s Office of Foreign Asset Control’s rules, any international insurers where their capital backers or shareholders were from US, would not be able to write any risks in the sanctioned countries.
“When they could not write the risks, we are unable to fully insure our risks in those countries, so the captive can act as a capacity provider in that respect.
“And this is one of the benefits of setting up a captive,” she said.
A captive is an insurance or reinsurance entity, wholly-owned directly or indirectly by an industrial, commercial or financial entity, that provides insurance or reinsurance coverage for the risks, assets and liabilities of its parent company.
Raziyah said currently, Energas was writing the operational complex risks that involved sectors such as offshore and refinery.
“We are now gradually embarking on writing project-related risks such as construction and studying the liability risks, which we believe we have the expertise to internally assess them,” she said, adding that medical risks would be the next phase to look into.
Earlier, in a panel session themed “A Year In the Life of Captive”, Raziyah said the establishment of Energas in Labuan had enabled Petronas to save the insurance premium costs.
“The costs that we saved for every five years are equivalent to the premium that we could spend annually,” she said.
It was reportedly earlier that Petronas saved about 25% of insurance premium costs annually after spending US$10.5mil to set up Energas in March 2005.
Prior to that, Petronas had to fork out about RM1bil yearly for insurance premium to other conventional insurance companies. - Bernama
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