Nigeria is facing mounting pressure to establish a protection and indemnity (P&I) insurance club as new estimates suggest the country has lost between $4 billion and $5 billion in marine insurance premiums to foreign insurers since 2018.

In 2018, a formal proposal was submitted to the then Vice President, Prof. Yemi Osinbajo, making a case for establishing a locally domiciled P&I club that would handle the liabilities currently insured abroad and begin to retain capacity locally.

A seasoned maritime and commercial litigator, Ejide Sodipo, said despite the VP’s support for the initiative and directives to regulatory agencies to act, bureaucratic inertia and conflicting internal priorities ultimately stalled the effort.

She told The Guardian that since then, about $5 billion in marine insurance premiums on Nigerian risks, including pollution, wreck removal, cargo damage and crew injury, flew to flow abroad.

The Nigerian Maritime Administration and Safety Agency (NIMASA) had in March disclosed that the country has lost over $1.5 billion in marine insurance premiums to foreign markets in the past three years alone.

Sodipo, who has represented members of the International Group of P&I Clubs – an elite consortium that insures nearly 90 per cent of the world’s ocean-going tonnage, said the loss could create jobs for local underwriters, maritime lawyers, actuaries, claims specialists and administrative professionals.

She said it could also strengthen Nigeria’s financial market, pay taxes, engage local banks, law firms and regulators as well as retain profits that could be reinvested into infrastructure, training or reinsurance facilities.

The maritime lawyer said despite existing Nigerian laws mandating local insurance placement, including the Nigerian Oil and Gas Industry Content Development Act (2010), enforcement has been weak.

Sodipo noted that the law requires all insurable risks in the oil and gas industry to be underwritten by Nigerian firms unless expressly exempted by the National Insurance Commission (NAICOM). She said, yet in practice, large swaths of Nigeria’s marine insurance are still entirely placed offshore.

“Every tanker, container ship and offshore vessel operating in Nigerian waters is required to carry multiple layers of insurance. But while other countries have built robust domestic insurance ecosystems around these obligations, Nigeria continues to export the entire value chain—premiums, legal processing, claims management, everything,” Sodipo noted.

According to her, the implications are massive, especially as ports in Lagos, Onne and Calabar, handle thousands of vessels yearly, while the country’s offshore oil and gas sector generates enormous insurable risk.

She said yet, virtually none of the associated premiums, which could stimulate domestic finance, employment and infrastructure, are retained locally.

Sodipo warned that presently, Nigeria is forfeiting not just money, but sovereignty, especially as the jobs and skills servicing Nigerian maritime risks such as underwriting, claims processing and legal arbitration, are handled in London, Oslo, and Singapore, using Nigerian data.

The maritime lawyer pointed to nations like China and South Korea, which have successfully established domestic P&I clubs to safeguard their shipping interests and insulate their economies from foreign market shocks.

The Director General of NIMASA, Dr Dayo Mobereola, had suggested that localising the projected $600 million upstream vessel engagement economy would positively impact the financial and insurance institutions if a large chunk is retained in the country.
Sodipo said localising even part of the $1.5 billion could start to reshape Nigeria’s industry from within.

“Every year, Nigeria loses hundreds of millions of dollars to foreign P&I clubs, money that could be used to build our maritime insurance capacity, create jobs and support local expertise. It is a quiet but steady drain on our economy, and it is time we did something about it. We don’t lack the talent or the insight, what we need now is the collective will to build something of our own,” Sodipo concluded.