How Nigeria’s marine insurance mirrors global situation
The Nigerian maritime insurance, like the global market, is fraught with challenges. While the local market is battling the prevalence of fake operators and fake certificates, causing the industry to lose huge premiums, and also erosion of confidence, the global market is facing huge losses as a result of catastrophic events and terrorist attacks.
The marine insurance business, usually reported together with aviation risks, according to the Nigerian insurance industry report, contributed just N22 .09 billion in 2017, out of the industry’s nearly N300 billion premium.
The Nigerian Insurers Association (NIA), however, said it has secured the approval of the National Insurance Commission (NAICOM), and the Central Bank of Nigeria (CBN), to digitalise marine insurance business.
Besides, it is already working with some partners, including the Nigerian Inter-Bank Settlement System (NIBBS), to drive marine insurance through the Unstructured Supplementary Service Data (USSD) code, just as it has done with motor insurance policies.
Chairman of NIA, Tope Smart, who disclosed this to newsmen in Lagos, argued that this will check and eradicate fake insurance in marine business, as well as restore consumer confidence.
The International Union of Marine Insurance (IUMI) Cargo Committee Chair, Sean Dalton, reported late last year that despite global cargo premiums amounting to $16.1 billion, the cargo line has been unprofitable for several years with rising loss ratios and expense ratios, which are of great concern to underwriters.
Speaking at IUMI’s yearly conference in Cape Town, Dalton explained that growth in global merchandise trade was expected to remain strong in 2018 and 2019.
While this was positive for cargo marine insurers, continued growth was dependent on various factors, political and economic, and there were some serious concerns.
An increasing number of countries were restricting or restraining international trade, and this was creating a protectionist-operating environment.
2017 was regarded as the worst year for natural catastrophe losses in the history of the insurance industry with Hurricanes Harvey, Irma, and Maria all caused cargo losses, particularly with an increase in static risk covers.
Dalton explains: “The cargo insurance market is starting to firm, but it still has a way to go. Many cargo accounts were severely affected by events in 2017; and 2018 looks set to be another very active year.
“Nat-cats and large/outlier losses, such as the Tianjin port explosion in 2016, have demonstrated the need for the cargo market to price realistically for such losses and develop risk adequate premiums.”
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