As Nigeria strives to reposition itself as a hub of maritime excellence in West and Central Africa, the persistent imposition of war risk insurance premiums on vessels calling at its seaports remains a significant obstacle to competitiveness, cost-efficiency, and investor confidence, ADAKU ONYENUCHEYA reports.
For over two years, Nigeria’s waters have been globally certified free from piracy incidents. This followed the combined efforts of the Deep Blue Project, the Nigerian Navy’s Falcon Eye and coordinated regional patrols across the Gulf of Guinea.
Despite this progress, vessels bound for Nigerian ports continue to pay war risk insurance (WRI) premiums. The additional cost raises questions about why the country is still billed for risks that no longer exist.
Some stakeholders argue this may amount to global sabotage, given Nigeria’s reliance on imports and its strategic position in maritime trade.
When the Gulf of Guinea (GoG) was the global epicentre of piracy, responsible for over 40 per cent of incidents between 2015 and 2020, Lloyd’s of London, Protection and Indemnity (P&I) clubs and other foreign underwriters imposed war risk premiums on Nigerian-bound vessels.
Then, the justification was that shipowners needed protection against hijackings, crew kidnappings and ransom demands.
WRI covers losses resulting from events such as war, piracy, invasions, insurrections, riots, strikes and terrorism, which are typically excluded from standard marine policies.
The premium comprises two components: war risk liability, which covers people and goods on board, calculated based on indemnity value and war risk hull, which insures the vessel itself based on its overall worth.
In reality, Nigeria only experienced piracy and not the other critical issues listed, yet the country has maintained a zero-record status since 2022, according to the International Maritime Bureau (IMB) and the International Bargaining Forum (IBF).
Both institutions removed Nigeria from their list of piracy-prone waters in recognition of this achievement.
Recall that the Gulf of Guinea recorded some criminal activity, which declined yearly.
IMB data shows 17 incidents in 2019, with 121 crew kidnapped, compared to 84 incidents and 135 kidnappings in 2020. This dropped sharply to 35 incidents in 2021, 19 in 2022, 22 in 2023 and 18 in 2024.
Nigeria’s waters reflect this downward trend. According to the IMB’s ‘Piracy and Armed Robbery Against Ships’ report, Nigeria recorded 33 incidents in 2017, 48 in 2018, 35 in 2019, 35 in 2020, and six in 2021. In 2022, there were no attacks, followed by just two incidents in 2023 and a single case in 2024.
The IMB confirmed in its 2024 report that incidents in Nigerian waters have decreased significantly and consistently highlighted the Gulf of Guinea’s overall improvement, with Nigeria playing a leading role in this success.
Success of security measures
Piracy attacks in Nigerian waters have dropped to zero, following massive investments in the Deep Blue Project, the Nigerian Navy (NN) Falcon Eye system and strengthened regional collaboration under the Yaoundé Code of Conduct.
The Flag Officer Commanding Western Naval Command, Rear Admiral Gregory Oamen, disclosed that in 2022 alone, the Navy spent 36,809 hours and 40 minutes on patrols, which led to the arrest of 191 suspects with an additional 80 suspects apprehended in 2023.
Oamen noted that these response initiatives have created a safer maritime environment, enabling activities such as offshore exploration and fishing to flourish.
He further highlighted improvements in shipping traffic, stating that the number of vessels calling at Nigerian ports rose from 123 daily in 2021 to about 145 daily in 2023.
Similarly, Gross Domestic Product (GDP) from fishing increased from N12 billion to N15 billion within the same period.
Also speaking, the Director General of the Nigerian Maritime Administration and Safety Agency (NIMASA), Dr. Dayo Mobereola, acknowledged that the country’s strategic position in the Gulf of Guinea has long exposed its waters to piracy, armed robbery, and geopolitical threats, which initially led to the imposition of WRI premiums.
He stressed, however, that significant progress has been achieved, with no piracy incidents recorded in the last four years.
Mobereola attributed this success to the Integrated Maritime Security Architecture, popularly known as the Deep Blue Project, launched in 2021, which deployed assets across land, sea, air, and intelligence domains to secure Nigerian waters.
The NIMASA chief also pointed to the Suppression of Piracy and Other Related Maritime Offences (SPOMO) Act, enacted in 2019, as another critical tool in combating piracy.
Since 2020, two major convictions of pirates have been secured at the Federal High Court under the legislation.
He further cited ongoing collaborations with regional and international bodies as vital to sustaining progress in the Gulf of Guinea.
However, despite these achievements, international underwriters have continued to impose WRI premiums on Nigeria-bound cargoes, a practice that stakeholders argue no longer reflects the nation’s improved maritime security profile.
WRI’s economic cost to Nigeria
Despite significant improvements in maritime security, the financial burden of WRI premiums on Nigeria’s economy remains enormous.
Industry data shows that Nigeria-bound cargoes pay an estimated $400 billion yearly to Lloyd’s of London P&I clubs and other international insurers.
According to NIMASA, a Very Large Crude Carrier (VLCC) valued at $130 million attracts a WRI surcharge of about $445,000 per voyage, while newer container vessels valued at $150 million face costs of up to $525,000 per voyage.
NIMASA further noted that global shipping giants have added their own levies.
“Maersk, one of the world’s largest shipping companies, has introduced a transit disruption surcharge of up to $450 per container, while other shipping lines impose a war risk surcharge of $40 to $50 per 20-foot container,” the agency stated.
The Executive Secretary/Chief Executive Officer of the Nigerian Shippers’ Council (NSC), Dr. Pius Akutah, said the continued imposition of these premiums is unjustifiable, given the country’s improved security metrics and demonstrable commitment to safe shipping.
He stressed that the charges are ultimately passed on to importers, exporters, freight forwarders, and consumers, inflating the price of goods and eroding trade competitiveness.
Experts warn that the ripple effects extend beyond consumer prices, noting that higher import bills, driven by insurers’ surcharges, make Nigerian ports less attractive compared to regional rivals such as Lomé, Cotonou, or Tema, where shipping costs are lower.
Also, small and medium-sized enterprises (SMEs) are particularly affected, as many traders and manufacturers struggle to absorb additional costs, stifling industrial growth and limiting job creation.
Challenges
President of the Maritime Security Providers Association of Nigeria (MASPAN), Emmanuel Maiguwa, highlighted the systemic issues fueling Nigeria’s risk profile and the continued burden of WRI.
Maiguwa noted that despite a sharp decline in piracy incidents, foreign insurers have yet to revise Nigeria’s premiums downward, asking, “Why is Nigeria still being punished despite the progress recorded?”
One key concern raised by stakeholders is the prosecution of maritime criminals.
The Nigerian Navy reported arresting 191 suspects in 2022 and 80 in 2023 for maritime crimes, through intelligence-driven operations, with some allegedly linked to Somali-owned vessels operating in Nigerian waters.
The Navy also reported that between 2015 and 2021, it handed over 333 vessels involved in infractions to relevant authorities, with several successful piracy prosecutions achieved under the SPOMO Act.
However, stakeholders questioned how many of those suspects were successfully prosecuted, warning that without convictions, international confidence in Nigeria’s security will remain low.
The Navy admitted that while sustained sea presence and joint operations with the Department of State Services (DSS) have weakened piracy networks, funding remains a major barrier.
Commanding Officer of NNS Thunder, Captain Olanrewaju Oginni, revealed that operating a small frigate costs between $50,000 and $70,000 per month.
He explained that keeping the NNS Thunder at sea requires 891,000 litres of Automotive Gas Oil (AGO), which at N1,379 per litre amounts to N1.2 billion yearly, a figure far beyond the Navy’s current budget.
Oginni added that budget allocations are sometimes complemented by Special Intervention Funds (SIF) from the Federal Government, but these are irregular.
“For instance, in 2023, the Navy requested N33 billion as an intervention fund. If released consistently, this would sustain logistics requirements for our sea presence.
While the government has supported operational and capital procurements, current funding is still below what is required to meet our constitutional responsibilities,” he explained.
Stakeholders also pointed to weak inter-agency collaboration. Former Director-General of NIMASA, Temisan Omatseye, stressed that while the Navy is critical, other agencies, including the Marine Police, Customs, and Immigration, have statutory responsibilities that must be harmonised.
Another challenge is the application of the Best Management Practices (BMP) West Africa guidelines, regarded by ship captains as a “security bible.”
Stakeholders argue that routing incident reports through Abidjan instead of the Nigerian Navy delays responses and unfairly worsens Nigeria’s security rating in insurers’ assessments.
Security experts agree that misalignment between BMP West Africa and Nigeria’s own protocols distorts the country’s image, feeding the very risk assessments that sustain high premiums.
Beyond security, Maiguwa warned that structural bottlenecks in Nigeria’s shipping operations, such as excessive ship-to-ship transfer charges and reliance on foreign security escorts, make the nation’s waters less competitive compared to neighbouring Lomé, Togo, where costs are reportedly three times cheaper.
He concluded that unless Nigeria addresses its justice system, strengthens inter-agency collaboration, and reforms maritime cost structures, the WRI burden will persist, regardless of actual improvements in security.
Omatseye also cautioned that if left unchecked, the dominance of foreign insurers and external security frameworks could cripple Nigeria’s sovereignty in global trade.
“The next colonisation of Nigeria will come through shipping. If sanctions are placed on us tomorrow, we will be crippled because we have no control over our cargoes. That is the danger ahead,” he warned.
Why WRI burden continues
Lloyds of London and other global insurers are often slow to reflect current realities, instead relying on historical data to impose WRI premiums on countries labelled “high risk.”
For instance, Pakistan, since the mid-2010s, Karachi was deemed unsafe due to terrorism and piracy spillovers, yet the country managed to negotiate lower WRI rates.
With a strong naval presence, improved intelligence coordination, and active international lobbying, the country succeeded in convincing insurers to scale back charges.
In contrast, Nigeria, despite being delisted from piracy-prone waters and investing heavily in maritime security, continues to pay some of the world’s highest premiums.
The Former NIMASA boss described the situation as “unfair exploitation” of Nigeria by foreign insurers through arbitrary premium hikes.
Omatseye noted that Nigeria has been compelled to pay more than Pakistan did at the height of its terror crisis.
According to him, the Joint War Risk Committee (JWRC) in London raised Nigeria’s war risk premium from 0.025 per cent to 0.625 per cent, a steep increase that exceeded the 0.25 per cent imposed on Pakistan during its worst insurgency years.
“This is nothing but economic exploitation. Every time an incident is reported in Nigeria, the JWRC arbitrarily decides to raise the premiums. There is no scientific analysis, no fair assessment—it is simply at their discretion,” Omatseye declared.
During his tenure at NIMASA, Omatseye said efforts were made to establish a local insurance portal to challenge the dominance of foreign players, but the initiative collapsed due to a lack of political support and resistance from powerful reinsurers in the United Kingdom.
“Even when we secured a United Kingdom (UK) reinsurer to support us, he said he could only proceed if there was a green light from Nigeria’s president. The fear was that the British government earns so much from these premiums that they would block any alternative,” Omatseye added.
Call for action
At the recent Maritime Reporters Association of Nigeria (MARAN) Annual Maritime Lecture in Lagos, government agencies, regulators, security agencies, and industry stakeholders brainstormed actionable solutions to end the war risk designation on Nigeria’s waters.
Omatseye warned that Nigeria’s growing role as a global energy hub makes it increasingly vulnerable to exploitation by foreign insurers.
With the Dangote Refinery’s 650,000 barrels-per-day capacity, the rise of modular refineries, and expanding LNG exports, he said maritime traffic into Nigeria will multiply, leaving shipowners exposed to excessive premiums unless local alternatives are developed.
Omatseye urged the government to urgently support the creation of a Nigerian-backed WRI pool to reduce costs and break foreign dominance.
“We should not be going to London to beg anyone. Let us create our own war risk insurance mechanism here. Once we crash the rates, they will have no choice but to review theirs. Competition is the only way out,” he argued.
Also speaking, the Secretary-General of the Abuja Memorandum of Understanding (MoU), Captain Sunday Umoren, called for decisive measures to address the economic burden of elevated WRI premiums and unlock the benefits of Nigeria’s strategic maritime position.
Umoren stressed that while foreign shipowners enjoy Nigeria’s facilities, the ultimate burden of inflated insurance and freight costs falls on Nigerian businesses and consumers.
He argued that increasing vessel traffic through Nigerian ports would strengthen bargaining power to demand lower premiums, ultimately reducing freight charges and improving competitiveness for importers and exporters.
On the issue of Nigeria’s ship and flag registry, Umoren noted that progress remains slow.
He maintained that greater local ownership among shipowners is key to sovereignty in shipping decisions.
“When most of the shippers or shipowners are Nigerians, they can determine their own course, and the world will not decide their fate for them,” he said.
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