IRS Airlines wins disputes against 18 Nigerian insurance firms

In a landmark ruling delivered o by Hon. Justice K. A. Jose at the High Court of Lagos State (Commercial Division), IRS Airlines Limited secured a significant victory in its long-running insurance dispute against 18 Nigerian insurance companies.

 The case, suit no. LD/3187CMW/2017, centred on the insurers’ refusal to honour a claim following the total loss of a Fokker 100 aircraft (registration 5N-SIK) in a 2014 accident in the Republic of Niger.

The court granted several key declarations in favour of IRS Airlines, the claimant. It ruled that the terms and conditions of the reinsurance contract arranged by the lead insurer (Standard Alliance Insurance PLC) with a foreign underwriter (Rosgosstrakh Limited, joined as third party) were not binding on IRS Airlines and did not apply to the direct insurance policy issued by the defendants.

 The policy, covering six aircraft, including the lost Fokker 100, ran from July 7, 2013, to July 6, 2014, with an agreed value up to $5 million per aircraft for all risks, including flight, taxiing, and ground operations.

The court declared the insurers’ refusal to pay—based on alleged breaches under the foreign reinsurance terms (which IRS Airlines was not party to and which were not incorporated into the local policy)—a violation of Section 55(2)(a) & (b) of the Insurance Act CAP 117, Laws of the Federation of Nigeria 2004, and a breach of the insurance contract.

Additionally, the judgment held that the appointment of a foreign loss adjuster without National Insurance Commission approval, and without collaboration with a registered Nigerian loss adjuster firm, rendered the investigation null and void under Section 48 of the same Act.

On damages, the court awarded the sums claimed against each defendant in proportion to their liability shares (totalling 100%, with 30% retained locally and 70% reinsured abroad).

The awards totalled approximately $3.65 million against the lead insurer and varying amounts against others (e.g., $200,000 against Industrial & General Insurance, $ 150,000 against Mutual Benefit Assurance), or their Naira equivalents at prevailing exchange rates. Interest was granted at 21% per annum from May 2014 until judgment, and 6% thereafter until full satisfaction.

The 14th defendant (Wapic Insurance PLC) had counterclaimed, seeking declarations that the policy was void for breach and that it bore no liability, but the court dismissed this position, upholding the validity of the contract.

The dispute stemmed from the May 10, 2014, incident where the aircraft, returning from a C-check abroad, suffered navigational issues mid-flight, leading to an emergency landing and total loss (no fatalities).

IRS promptly notified authorities and the lead insurer, paid all premiums in instalments, and made full disclosures.

 Insurers rejected the claim, citing foreign reinsurance exclusions (e.g., ground-risk-only status, alleged airworthiness breach), relying on a foreign adjuster’s report that the IRS challenged as flawed, contradictory, and lacking proper data analysis of the aircraft.

The judgment highlights tensions in Nigerian aviation insurance, where local policies can be undermined by undisclosed foreign reinsurance terms and procedural lapses in claims handling. It reinforces insured parties’ protections under Nigerian law against reliance on external arrangements to which they did not consent.

This ruling may set a precedent for similar claims in the sector, emphasising transparency, proper incorporation of terms, and compliance with local regulatory requirements for investigations.